The Salvation Army - Intermountain Division

FINDING 2025‐001—ALLOWABLE COSTS/COST PRINCIPLES AND ACTIVITIES ALLOWED AND UNALLOWED AND SPECIAL TEST – DRAWDOWNS OF HOME/HOME ARP FUNDS—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE FEDERAL PROGRAM: Home Investment Partnerships Program (HOME) ASSISTANCE LISTING NUMBER: 14.239 YEAR(S): 2025 FEDERAL AGENCY: Department Of Housing and Urban Development (HUD) PASS‐THROUGH AGENCIES: Idaho Housing and Finance Association Criteria - In accordance with 2 CFR 200.303 the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition/Context - On a periodic basis management submits draw-down requests to the pass-through agency. Management could not provide documentation to evidence that a review was performed over 100% of the draw-down requests prior to their submission. Further, during the testing of the underlying expenses, which are the primary inputs into the above-mentioned drawdown requests, management was able to evidence their review of payroll expenses via approved time sheets. However, non-payroll expenses and their associated indirect cost allocation calculations did not have evidence of management’s review for allowability. Cause - Management did not design and implement a control that required documented evidence of review and approval of the drawdown request. The control also did not ensure that the evidence of review of the underlying non-payroll expenses and indirect cost allocation calculations were retained. Effect - Management may not be able to detect and prevent unallowable expenses from being submitted to the passthrough agency for reimbursement, which could result in unallowed expenses being charged to the grant. Questioned Cost - Not Applicable Recommendation - Management should design and implement a control that ensures sufficient evidence of approval is obtained and retained, including underlying indirect cost allocation calculations and non-payroll costs. View of Responsible Officials - See Corrective Action Plan.

Finding 2025‐001–Allowable Costs and Cost Principles and Activities Allowed and Unallowed—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE Federal Program: The Food Distribution Cluster Assistance Listing Number: 10.568 and 10.569 Year(s): 2025 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank, Food Link Food Bank, and CAPK Food Bank. Criteria—In accordance with 2 CFR 200.502(g), Federal non-cash assistance food commodities received as part of a Federal award to carry out a Federal program must be valued at fair market value at the time of receipt, or the assessed value provided by the Federal agency, and must be included in determining Federal awards expended and reported on the Schedule. Condition and Context— We selected 60 food commodity delivery receipts for food commodities delivered to sub-recipients (Sub-ERAs) in order to test the controls related to food distributions to Sub-ERAs at the Division's Modesto Corps. Of the 60 selections, 51 selections did not have evidence of review, indicating a deficiency in the related internal controls. The delivery receipt includes the quantity, and thus the monetary value, of the food commodities distributed to Sub - ERAs. The monetary value of those food commodities is included in the Schedule. In addition, 4 sign-in-sheet selections related to the monthly control over food directly distributed to individuals at the Modesto Corps were provided. The sign-in sheets contained the quantity of food commodities that were distributed, which were then used to populate the Schedule. The 4 sign-in-sheet selections did not have evidence of review. The quantity of food commodities is measured in the number of food boxes, with each weighing either 13 or 50 pounds, and the monetary value of those food commodities is then included in the Schedule. Cause— Management is in the process of maintaining evidence pertaining to the review of the distribution of the food commodities. The process was not fully established as of the period under audit. Effect— Without evidence of proper reviews, discrepancies could exist between the amount of actual food commodities distributed and the amount recorded on the Schedule, which could lead to incorrect information being communicated to the grantor and the possible cessation of grant funding. Questioned Costs—None. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management take steps to ensure that proper review is performed, and evidence of such reviews is maintained. View of Responsible Officials—See Corrective Action Plan.

Finding 2025-001 MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE, MATERIAL NONCOMPLIANCE -REPORTING Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: US Department of Treasury Pass- Through Agencies: Various Assistance Listing Number: 21.027 Criteria: Management is required to submit various annual, quarterly, and monthly reports to the grantor in accordance with the grant agreement. Additionally, 2 CFR 200.303 requires management to have appropriate controls such that appropriate preparation, reviews, and evidence of those reviews are in place. Condition/Perspective: Based on the results of the testing we noted the following: • Out of a total of 4 Annual reports sampled, 3 did not have proof of submission or review. • Out of a total of 16 Quarterly reports sampled, 10 did not have proof of submission or review and 5 had proof of submission, but no proof of review. Of the 6 reports with proof of submission, 2 were submitted late. • Out of a total of 13 Monthly reports sampled, 1 did not have proof of submission or review. Of the reports with proof of submission 7 were submitted late. Cause: Management continued to experience high turnover during the fiscal year and the documentation pertaining to the evidence of reviews and the evidence of report submission was not retained. Effect: Without appropriate controls in place there is a risk that the Division could have submitted a report that is incomplete, contained inaccurate information, past the reporting requirement due date, or could have failed to submit the report entirely. Noncompliance with such grant requirements could result in a loss of funding. Questioned Cost: None. Repeat Finding: Yes. See 2024-001 in prior year report. Recommendation: Division management should review all applicable grant compliance requirements and ensure that the requirements are being met, including that reports are submitted on a timely basis. Additionally, the Division should continue to address and enhance their control procedures such that the appropriate individuals review all required reports in a timely manner prior to submission to the granting agency(ies); and, maintain documentation evidencing such reviews and submission dates. View of Responsible Officials: See Corrective Action Plan.

Finding 2025-002: Special Tests and Provisions – Accountability for USDA Foods – Significant Deficiency in Controls over Compliance and Noncompliance Federal Program: Food Distribution Cluster Year(s): 2025 Federal Agency: U.S. Department of Agriculture (USDA), Food, and Nutrition Services Contract - D-125, The Salvation Army, Reno Pass-Through Entity: Nevada Department of Agriculture Criteria – Agencies must conduct an annual physical inventory of all storage facilities used by the distributing agency or by a sub distributing agency. Such inventory must be reconciled annually with the storage facility’s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. The Del Oro Reno Division (the Division) is required to submit monthly inventory reports of all The Emergency Food Assistance Program (TEFAP) USDA donated foods on hand at their own or contracted facility to the Contracted Regional Agency monthly. The report shall indicate for each TEFAP UDSA donated food item: the commodity description, inventory on hand, inventory received for the month, total available for the month, total distributed, total delivered to another agency, inventory adjustments and ending inventory for the month. Condition – We selected 4 of the 12 monthly inventory reports to test the Division’s inventory process. We vouched the inventory quantity listed on the reports to delivery reports. Inventory was counted monthly and inventory reports were submitted to the grantor as required. However, there was no evidence of review for 2 of the 4 inventory reports selected for testing. Furthermore, there were discrepancies in the April and September inventory reports, whereby the inventory reports understated the quantity by 20 cases and 1 case, respectively, based on our review of the corresponding delivery reports. Cause – The Division did not maintain documentation of their review of the inventory reports. Further, the review control over the inventory reports was not detailed and precise enough to detect the above errors. Effect – As a result of a lack of proper review, the Division had discrepancies in the inventory reporting process. Repeat Finding – Yes. Recommendation – We recommend the Division implement a review process to ensure the accuracy of the inventory management and reporting process. Views of the responsible officials – See Corrective Action Plan.

FINDING 2025‐002—ELIGIBILITY—SIGNIFICANT DEFICIENCY IN INTERNAL CONTROLS OVER COMPLIANCE AND NONCOMPLIANCE FEDERAL PROGRAM: Home Investment Partnerships Program (HOME) ASSISTANCE LISTING NUMBER: 14.239 YEAR(S): 2025 FEDERAL AGENCY: Department Of Housing and Urban Development (HUD) PASS‐THROUGH AGENCIES: Idaho Housing and Finance Association Criteria - Only low income or very low-income persons, as defined in 24 CFR section 92.2, can receive housing assistance (24 CFR section 92.1). Therefore, the entity must determine if each family is income eligible by determining the family’s annual income, including all persons in the household, as provided for in 24 CFR section 92.203. The entity must maintain records for each family assisted (24 CFR section 92.508). Condition/Context – From 32 selections of a management prepared listing of participants who received housing or utility assistance, management could not provide documentation verifying eligibility, nor the dollar value provided to, 2 of the samples. Further, 4 out of the 32 selections had an initial intake case manager signature on the application, however there was no evidence that a secondary review of eligibility was performed. Cause - Management has not designed and implemented a control to ensure all eligibility documentation is maintained for program participants; further, management did not perform or retain evidence of a secondary review of participant eligibility. Effect - Assistance could be provided to participants who were ineligible, reducing the amount of funding available for eligible participants. Questioned Cost - Could not be determined. Management was unable to verify whether the 2 selections that had missing documentation received any assistance from the federal awards. Recommendation - Management should design a control to ensure all the documentation is maintained for the applicants regarding their application status and further ensure documentation is maintained evidencing that a secondary review was performed over all applications. View of Responsible Officials - See Corrective Action Plan.

Finding 2025-002—Eligibility—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE AND MATERIAL NON-COMPLIANCE Federal Program: The Food Distribution Cluster Assistance Listing Number: 10.568 and 10.569 Year(s): 2025 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank, Food Link Food Bank, and CAPK Food Bank. Criteria—In accordance with the Code of Federal Regulations (7 CFR sections 247.4, 247.7(a), 251.3(d), and 251.5(a)), a sub recipient must be either a public agency or a private entity possessing tax-exempt status under the Internal Revenue Code, and must enter into a written agreement with the state agency, or with another recipient agency where permitted, binding it to perform the duties of a recipient agency. Individual recipients must sign the Certificate of eligibility form (EFA-7), which is a self-declaration that they meet all the eligibility requirements to participate in the program. Specifically, the participants are required to self-declare their household’s gross income is at or below the applicable TEFAP income guideline amount and they are prohibited from selling, bartering, or trading food received through this program. Condition and Context— To test the eligibility of individual recipients, we made a total of 60 selections of individuals who received food commodities from distribution sites that maintained self-declaration forms. Of the 60 selections, there was no evidence that 10 of the individuals signed the self-declaration form. The value of the food commodities provided to the 10 individuals could not be determined due to the lack of applicable documentation. Additionally, the Division managed distribution sites that collectively distributed $1,294,618 of food commodities and did not require or maintain self-declaration forms for the participants in accordance with the grant. Cause—Management at certain distributions sites was unaware of the grant requirements requiring individuals to self-certify their eligibility and maintain such evidence. Effect—Ineligible individual participants could receive grant funded food commodities instead of eligible participants. Questioned Costs—$1,294,618 Repeat Finding from Prior Year—Yes. Recommendation—We recommend management take steps to ensure the distribution sites require participants to self-certify that they meet the grant eligibility requirements and to maintain such evidence. View of Responsible Officials—See Corrective Action Plan.

Finding 2025-002 SIGNIFICANT DEFICIENCY IN IN INTERNAL CONTROLS OVER COMPLIANCE, NONCOMPLIANCE – Allowable Costs and Cost Principles and Activities Allowed and Unallowed Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: US Department of Treasury Pass- Through Agencies: Various Assistance Listing Number: 21.027 Criteria: Allowability of costs should be adequately documented in accordance with 2 CFR 200.403 (g). Condition/Perspective: From an allowable cost sample of 40, 5 selections could not be agreed to the underlying support. In 4 instances the amount charged to the federal award was less than the amount per the provided payroll support and in 1 instance the amount charged to the federal award was greater than the amount per the provided payroll support. This resulted in a total of $1,982.85 (understatement) in unsubstantiated payroll expenses allocated to the federal award. Cause: Documentation pertaining to the calculation of allocating payroll expenses to the federal award was unavailable as it was not retained. Effect: Without retention of the appropriate support there is a risk that the Division could charge costs that are not allowed by the federal award. Noncompliance with allowability criteria could result in the Division having to refund the granting agency or a loss of funding. Questioned Cost: $1,982.85 Recommendation: Management should design and implement a control that prevents unsubstantiated expenses from being charged to the federal award; and, retain all documentation supporting such charges. View of Responsible Officials: See Corrective Action Plan.

FINDING 2025‐003— ALLOWABLE COSTS/COST PRINCIPLES AND ACTIVITIES ALLOWED AND UNALLOWED—SIGNIFICANT DEFICIENCY IN INTERNAL CONTROLS OVER COMPLIANCE AND NONCOMPLIANCE FEDERAL PROGRAM: Coronavirus State and Local Fiscal Recovery Funds ASSISTANCE LISTING NUMBER: 21.027 YEAR(S): 2025 FEDERAL AGENCY: Department Of Treasury PASS‐THROUGH AGENCIES: State of Oregon and Multnomah County Criteria – Allowability of costs should be adequately documented in accordance with 2 CFR 200.403bullet point (g) Condition/Context – From an allowable cost sample of 60 selections, 2 selections were duplicated. Upon further investigation to quantify the error we noted expenses totaling $74,808 of non-payroll expenses were duplicated and improperly submitted for reimbursement. The associated indirect cost of $19,076 was also duplicated. Accordingly, total expenses that were subjected to the duplication error for the grant program was $93,884. Cause – When accumulating expenses for reimbursement management did not realize that they captured the same expense twice across the adjacent months. Effect - Unallowed or duplicate costs may be charged to the federal award without being identified by management. Questioned Cost - $93,884 Recommendation - Management should design and implement a control that prevents the duplication of expenses from being submitted for reimbursement. View of Responsible Officials - See Corrective Action Plan.

Finding 2025‐003—Special Test—Accountability for USDA Foods—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE Federal Program: The Food Distribution Cluster Assistance Listing Number: 10.568 and 10.569 Year(s): 2025 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank, Food Link Food Bank, and CAPK Food Bank. Criteria—Accurate and complete records must be maintained with respect to the receipt, distribution/use, and inventory of USDA Foods, including end products processed from USDA Foods. Failure to maintain records required by 7 CFR section 250.19 is considered evidence of improper distribution or loss of USDA Foods and the agency processor is liable for the value of the food or replacement of the food in kind (7 CFR sections 250.16 and 250.19(a)). Condition and Context— For the distribution site at the Division's Modesto Corps, supporting documentation of the inventory counts performed by the warehouse personnel and used by the management to prepare the inventory reports was not maintained. Even though the inventory reports were submitted to the grantor, there were no reviews of the inventory reports prior to being submitted. Cause—Management is in the process of implementing a control to ensure the inventory reports are reviewed for accuracy and completeness and that the backup documentation of inventory counts is maintained. The process was not fully established as of the period under audit. Effect—The inventory reports submitted to the grantor could contain discrepancies. This could lead to incorrect information being communicated to the grantor and possibly result in the agency processor being liable for the value of the food or replacement of the food in kind. Questioned Cost—None. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management take steps to ensure the documentation related to inventory counts are maintained and the inventory reports are reviewed prior to being submitted to the grantor. View of Responsible Officials—See Corrective Action Plan.

Finding 2025-003 SIGNIFICANT DEFICIENCY IN IN INTERNAL CONTROLS OVER COMPLIANCE – Allowable Costs and Cost Principles and Activities Allowed and Unallowed Federal Program: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: US Department of Health and Human Services Pass- Through Agencies: City & County of Denver Assistance Listing Number: 93.498 Criteria: In accordance with 2 CFR 200.303 the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition/Perspective: On a monthly basis management reviews costs for allowability and submits draw-down requests for reimbursement to the pass-through agency. From 3 selections of reimbursement requests, management could not provide documentation to evidence a review was performed prior to submission for 1 draw-down request. Cause: Documentation pertaining to the evidence of expenditure review was not retained as management was not aware that such documentation should be retained. Effect: Without appropriate review controls in place there is a risk that the Division could submit costs that are not allowed. Noncompliance with allowability criteria could result in the Division having to refund the granting agency or a loss of funding. Questioned Cost: None. Recommendation: The Division should enhance their control procedures such that documentation of review is retained. View of Responsible Officials: See Corrective Action Plan.

FINDING 2025‐004— REPORTING — MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE AND NONCOMPLIANCE FEDERAL PROGRAM: Coronavirus State and Local Fiscal Recovery Funds ASSISTANCE LISTING NUMBER: 21.027 YEAR(S): 2025 FEDERAL AGENCY: Department Of Treasury PASS‐THROUGH AGENCIES: State of Oregon and Multnomah County Criteria - The contract JOHS-SVCSGEN-14303-2023 that is passed through the Multnomah County and the contract CVI-2023-The Salvation Army Medford-00069 that is passed through the state of Oregon have various annual, quarterly, and monthly reporting requirements that contain both financial and non-financial (performance) information. Condition/Context - The JOHS-SVCSGEN-14303-2023 contract required the submission of: • 4 quarterly performance reports during the fiscal year. Management could not provide evidence that any of the performance reports were prepared, reviewed or submitted to the grantor. • Monthly invoices are due at the end of the following month. All 9 reports (100% of the population) were properly reviewed, and 5 reports were submitted to the grantor after the submission deadline. • The annual equity plan report. Management provided the prepared report, however, could not provide evidence that the report was reviewed or submitted to the grantor. The CVI-2023-The Salvation Army Medford-00069 contract required the submission of: • The annual CVI Statistical Report and the CVI End-of-Grant Report. Management could not provide evidence that these reports were prepared, reviewed or submitted to the grantor. • 2 quarterly project status reports. Management provided both reports, but one report did not have evidence of a review nor proof of submission to the grantor. • Quarterly submissions of a CVI Financial/Expenditure Report. Out of a sample of 2 reports, no issues were noted. Cause - Management did not have appropriate controls that were operating effectively to ensure the reports were reviewed and submitted to the grantor timely. Management also did not retain documentation to evidence the timely submission of certain reports. Effect - The grantor may withhold funding if timely report submissions are not received in accordance with the grant agreement. Questioned Cost - Not Applicable Recommendation - Management should design and implement a control that ensures reports are reviewed and submitted in a timely manner. Further, management should retain documentation to evidence the preparation and submission of all reports. View of Responsible Officials - See Corrective Action Plan

In-Kind Contributions Accounting and Disclosure

Finding 2024-001 MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE, MATERIAL NONCOMPLIANCE -REPORTING Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: US Department of Treasury Pass- Through Agencies: Various Assistance Listing Number: 21.027 Criteria: Management is required to submit various quarterly reports to the grantor in accordance with the grant agreement. Additionally, 2 CFR 200.303 requires management to have appropriate controls such that appropriate preparation, reviews, and evidence of those reviews are in place. Condition/Perspective: As part of testing, we sampled 10 out of 20 reports. While we were able to obtain copies of the sampled reports, management could not provide evidence of review for the reports. Out of the 10 sampled reports, 9 reports did not have evidence that the reports were submitted. Cause: Management experienced high turnover during the fiscal year and the documentation pertaining to the evidence of reviews and the evidence of report submission was not retained. Effect: Without appropriate controls in place there is a risk that the Division could have submitted a report that is incomplete, contained inaccurate information, not submitted, or past the reporting requirement due date. Noncompliance with such grant requirements could result in a loss of funding. Questioned Cost: None. Repeat Finding from Prior Year: Yes. See 2023-002 in prior year report. Recommendation: The Division should enhance their control procedures such that the appropriate individuals review the reports prior to submission to the granting agency(ies) and evidence of report review and submission is retained. View of Responsible Officials – See Corrective Action Plan.

Finding 2024-002: Special Tests and Provisions—Accountability for USDA Foods—Material Weakness in Controls over Compliance and Noncompliance Federal Program: Emergency Food Assistance Program (Food Commodities)—ALN 10.569 Year(s): 2024 Federal Agency: U.S. Department of Agriculture (USDA), Food, and Nutrition Services Contract—D-125, The Salvation Army, Reno Pass-Through Entity: Nevada Department of Agriculture Criteria—Agencies must conduct an annual physical inventory of all storage facilities used by the distributing agency or by a sub distributing agency. Such inventory must be reconciled annually with the storage facility’s inventory records and maintained on file by the agency that contracted with or maintained the storage facility. The Del Oro Reno Division (the Division) is required to submit monthly inventory reports of all The Emergency Food Assistance Program (TEFAP) USDA donated foods on hand at their own or contracted facility to the Contracted Regional Agency monthly. The report shall indicate for each TEFAP UDSA donated food item: the commodity description, inventory on hand, inventory received for the month, total available for the month, total distributed, total delivered to another agency, inventory adjustments and ending inventory for the month. Condition—We selected 4 of the 12 monthly reports to test the Division’s inventory process. The inventory was counted monthly and submitted to the grantor as required. However, there was no evidence of the review over the count process and the finalized inventory sheets that were submitted to the grantor. Further in the sampled reports, the following findings were noted. Month Selected Finding January 2024- Total cases received per delivery report was 1,192 whereas the total cases recorded in the report was 1,160. The discrepancy of 32 cases was a result of human error. April 2024/ August 2024 -The total cases distributed is calculated as Beginning Cases plus Cases received minus the cases in ending inventory at the end of the month. There was a mathematical error in the above process which led to a discrepancy of 10 cases in the April 2024 report and discrepancy of 26 cases inthe August 2024 report. September 2024 -This report contained inventory items that were donated by other sources and not a part of the Emergency Food Assistance Program. Cause—The lack of review over the inventory process. The inventory count sheets should be reviewed for accuracy and completed by personnel not performing the count. Effect—As a result of a lack of proper review, the Division had discrepancies in the inventory management and tracking process. Recommendation—We recommend the Division implement a review process to ensure the accuracy of the inventory management and reporting process. Views of the Responsible Officials—See Corrective Action Plan

Finding 2024-002 SIGNIFICANT DEFICIENCY IN IN INTERNAL CONTROLS OVER COMPLIANCE, NONCOMPLIANCE – Reporting Federal Program: Veteran Affairs Social Services Program Federal Agency: US Department of Veterans Affairs Assistance Listing Number: 64.033 Criteria: Management is required to submit various reports to the grantor in accordance with agency requirements. Additionally, 2 CFR 200.303 requires management to have appropriate controls such that appropriate preparation, reviews, and evidence of those reviews are in place. Condition/Perspective: Annual reports: During our procedures over controls, we identified one (1) instance where the Division could not provide evidence that the report had been reviewed prior to submission. Quarterly reports: During our procedures over compliance, we identified two (2) instances where the Division could not provide documentation that the required quarterly report had been submitted by the due date. Cause: Annual reports: The Division did not retain evidence that the report was reviewed. Quarterly reports: Due to system limitations, the system does not indicate when a report was submitted, only that it has been submitted. Management did not retain evidence of timely submission. Effect: Without appropriate controls there is a risk that the Division could have submitted a report that is incomplete, contained inaccurate information, or past the reporting requirement due date. Failure to maintain compliance with the reporting requirements could lead to a potential loss of funding. Questioned Cost: None. Recommendation: The Division should enhance their control procedures such that the appropriate individuals review the reports prior to submission to the granting agency(ies) and evidence of report review and submission is retained. View of Responsible Officials – See Corrective Action Plan.

Finding 2024‐002–Allowability—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE AND NON-COMPLIANCE Federal Program: The Food Distribution Cluster Assistance Listing Number: 10.565, 10.568 and 10.569 Year(s): 2024 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank, Food Link Food Bank, and CAPK Food Bank. Criteria—In accordance with 2 CFR 200.502(g), Federal non-cash assistance food commodities received as part of a Federal award to carry out a Federal program must be valued at fair market value at the time of receipt or the assessed value provided by the Federal agency and must be included in determining Federal awards expended under this part. Condition and Context—We selected 60 food commodity delivery receipts to sub-recipients (Sub-ERAs) for testing of the control related to food distributed to Sub-ERAs at the Division’s Modesto Corps; 45 selections did not have evidence of review, indicating a gap in the related internal controls. The delivery receipt includes the quantity of the food commodities distributed to Sub-ERAs. The monetary value of those food commodities is included in the Schedule. We also made 4 sign-in-sheet selections related to the monthly control over food distributed directly to individuals at the Modesto Corps. The sign-in sheets contained the quantity of food commodities that were distributed which were then used to populate the Schedule. The 4 sign-in-sheet selections did not have evidence of review and do not have evidence of review in accordance with the process flow of the warehouse. The quantity of food commodity is measured in the number of food boxes with each weighing 50 pounds and the monetary value of those food commodities is then included in the Schedule. Further, of the 60 selections tested for allowable costs, one of the selections related to food distributed to individuals at the Modesto Corps had a difference of 45 boxes distributed between what was recorded on the Schedule and what was reflected on the underlying support. This error is a result of lack of reviews being performed over the amount of food distributed directly to individuals at the Modesto Corps. Cause—Management was unaware that evidence pertaining to the review of the distribution of the food commodity items was required to be maintained, which further resulted in the differences in the boxes distributed. Effect—There could be discrepancies between the amount of actual food commodities distributed and the amount recorded on the Schedule, which could lead to incorrect information communicated to the grantor and the eventual cessation of grant funding. Questioned Costs—None. Repeat Finding from Prior Year—Yes. Recommendation— We recommend management take steps to ensure that proper review is performed and evidence of review including adequate documentation of the weight of food items distributed, is maintained. View of Responsible Officials—See Corrective Action Plan.

Finding 2024-003: Allowable Costs/Cost Principles—Payroll Calculation Errors—Significant Deficiency in Controls over Compliance and Noncompliance Federal Program: Coronavirus State and Local Fiscal Recovery Funds—ALN 21.027 Year(s): 2024 Federal Agency: U.S. Department of Treasury Contract—DHA SA-01-22/A2 Pass-Through Entity: Sacramento County Criteria—In accordance with 2 CFR 200.430 (g)(1) and (g)(1)(i) charges to Federal awards for salaries and wages must be based on accurate records and calculations. Condition/Context—Out of 31 payroll selections, 6 selections had calculation errors. In the process of recording the payroll cost for the grant, spreadsheet related errors were made in transferring the general ledger data into the reimbursement requests which were then used to populate the schedule of federal awards of expenditures. Questions Costs—Under the reportable threshold, hence not applicable Cause—The control to review the recording of the payroll general ledger details into the reimbursement request was not precise enough to identify the calculation errors. Effect—Incorrect cost can be charged to the grant which can lead to the potential disallowance of costs. Recommendation—We recommend the Division implement a more detailed and precise review process to ensure the accuracy and completeness of the reimbursement request. Views of the Responsible Officials—See Corrective Action Plan

Finding 2024-003—Eligibility—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE AND MATERIAL NON-COMPLIANCE Federal Program: The Food Distribution Cluster Assistance Listing Number: 10.565, 10.568 and 10.569 Year(s): 2024 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank, Food Link Food Bank, and CAPK Food Bank. Criteria—In accordance with the Code of Federal Regulations (7 CFR sections 247.4, 247.7(a), 251.3(d), and 251.5(a)), a sub recipient must be either a public agency or a private entity possessing tax-exempt status under the Internal Revenue Code and must enter into a written agreement with the state agency, or with another recipient agency where permitted, binding it to perform the duties of a recipient agency. Individual recipients must sign the Certificate of eligibility form (EFA-7), which is a self-declaration that they meet all the eligibility requirements to participate in in the program. Specifically, the participants are required to self-declare their household’s gross income is at or below the applicable TEFAP income guideline amount and they are prohibited from selling, bartering, or trading food received through this program. Condition and Context—To test the eligibility of individual recipients, we made a total of 60 selections of individuals who received food commodities from distribution sites that maintained self-declaration forms. Of the 60 selections, there was no evidence that 9 of the individuals signed the self-declaration form. Additionally, the Division managed distribution sites that collectively distributed $1,862,618 of food commodities and did not require or maintain self-declaration forms for the participants. Cause—Management at certain distributions sites was unaware of the grant requirements requiring individuals to self-certify their eligibility and maintain such evidence. Effect—Ineligible individual participants could receive grant funded food commodities instead of eligible participants. Questioned Costs—$1,862,618. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management take steps to ensure the distribution sites require participants to self-certify that they meet the grant eligibility requirements and to maintain such evidence. View of Responsible Officials—See Corrective Action Plan.

Finding 2024‐004—Special Test—Accountability for USDA Foods—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE Federal Program: The Food Distribution Cluster Assistance Listing Number: 10.565, 10.568 and 10.569 Year(s): 2024 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank, Food Link Food Bank, and CAPK Food Bank. Criteria—Accurate and complete records must be maintained with respect to the receipt, distribution/use, and inventory of USDA Foods, including end products processed from USDA Foods in TEFAP. Failure to maintain records required by 7 CFR section 250.19 is considered prima facie evidence of improper distribution or loss of USDA Foods and the agency processor or entity is liable for the value of the food or replacement of the food in kind (7 CFR sections 250.16 and 250.19(a)). Condition and Context—For the distribution site at the Division's Modesto Corps, supporting documentation of the inventory counts performed by the warehouse personnel and used by the management to prepare the inventory reports was not maintained. Further, there were no reviews of the inventory reports before they were submitted to the grantor. Cause—Management was unaware that they were required to review the inventory reports for accuracy and completeness and maintain the backup documentation of inventory counts. Effect—The inventory reports submitted to the grantor could contain discrepancies. This could lead to incorrect information being communicated to the grantor. Questioned Cost—None. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management take steps to ensure the documentation related to inventory counts are maintained and the inventory reports are reviewed prior to being submitted to the grantor. View of Responsible Officials—See Corrective Action Plan.

Finding 2024‐005—Period of Performance—SIGNIFICANT DEFICIENCY IN INTERNAL CONTROLS OVER COMPLIANCE AND NONCOMPLIANCE Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Year(s): 2024 Federal Agency: US Department of Treasury Pass‐Through Agencies: City of Modesto, Sacred Heart Community Service, and Second Harvest of Silicon Valley Criteria—A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition and Context—During testing of the Period of Performance (POP) requirement, 5 selected payroll expenditures totaling $7,983 of a total of 40 selections were incurred prior to the grant's start date as stated in the grant agreement with the pass-through entity, Sacred Heart Community Service. These 5 selections were related to payroll and benefits expenditures and were for the pay period May 19, 2024, to June 1, 2024, whereas the grant start date was June 1, 2024. Although the Division paid for those expenditures after the grant's start date, the underlying expenditure was incurred prior to such date, resulting in noncompliance with the POP compliance requirement and the associated control. There were a total of 42 payroll and benefits transactions totaling $43,861 that were incurred before the grant’s start date. Cause—Management focused on ensuring that the underlying costs were paid for within the grant's approved budget period rather than ensuring that the underlying costs were incurred within that period. Further, management did not obtain authorization from the grantor to charge costs that were incurred before the grant's approved budget period. Effect—The Division will be in noncompliance with its POP compliance requirement and there is risk the grantor will not reimburse the costs incurred. Questioned Cost—$43,861. Repeat Finding from Prior Year—No. Recommendation—We recommend that management take steps to ensure that only costs incurred during the approved budget period of a federal award’s period of performance are charged to the grant and any costs incurred before the federal award was made was authorized by the pass-through entity. View of Responsible Officials—See Corrective Action Plan.

Finding 2023-001 Significant Deficiency in Internal Controls Over Compliance – Reporting Federal Agency: U.S. Department of Veterans Affairs Pass through Grantor: None Federal Program: VA Homeless Providers Grant and Per Diem Program Assistance Listing Number(s): 64.024 Criteria: Management should submit complete and accurate reporting packages or reports in accordance with agency requirements. Management should design controls to ensure appropriate preparation and review of such reports. Condition/Context: During our procedures to test the operating effectiveness of the control over the Division's process for preparing and submitting the required report to the granting agency, we identified 1 instance out of 3 selections in which the annual SF-425 report was not reviewed prior to submitting to the granting agency. Cause: The control owner was not present during the period of submission and was on leave until June 30, 2024. The Division did not identify or train an alternative individual who could review the reports in the absence of the control owner. Effect: The Division could have submitted a report that is incomplete or contains inaccurate information. Questioned Costs: None. Recommendation: The Division should enhance their control procedures such that back up personnel is present to perform secondary review if the control owner is not available. Views of Responsible Individuals: See Corrective Action Plan.

REPORTING—SIGNIFICANT DEFICIENCY IN INTERNAL CONTROLS OVER COMPLIANCE Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Year(s): 2023 Federal Agency: US Department of Treasury Pass‐Through Agencies: Various Criteria—2 CFR 200.303 requires that the entity 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. Condition—During the walk-through of the reporting control, we observed the control process had both preparer and reviewer, which ensured the segregation of duties. The reviewer is knowledgeable of the report content and ensured the submission timelines were met; however, the control was designed and implemented in a manner that the review of the report occurs post submission to the grantor. This prevented the detection of any potential errors in the underlying reports prior to the submission. Context/Perspective - Six out of Six reports selected for testing were reviewed post-submission to the grantor. Cause—The Division did not appropriately design and implement the review control over the report. Effect—The Division could have submitted a report that is incomplete or contained inaccurate information. Questioned Cost—None. Repeat Finding from Prior Year—No. Recommendation—We recommend that the Division enhance their control procedures such that the appropriate individuals review the reports prior to submission to the granting agency(ies). View of Responsible Officials—See Corrective Action Plan.

FINDING 2023-002 Material Weakness in Internal Controls Over Compliance and Material Non-Compliance – Period of Performance and Special Tests and Provisions – Reasonable Rental Rates Federal Agency: U.S. Department of Housing and Urban Development Direct Grant Number: OR0135L0E012110 Pass through Grantor: Idaho Housing and Finance Association Pass through Contract: ID0080U0E012105/ID0080U0E012206 Federal Program(s): Continuum of Care Program Assistance Listing Number(s): 14.267 Criteria: Period of Performance - A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Reasonable Rental Rates - In accordance with 24 CFR section 578.49(b)(1), the rent paid, which is to be verified via rental records and lease agreements, may not exceed rents currently being charged by the same owner for comparable unassisted space. Condition/ Context: During our testing of rental payments for period of performance, 8 out of 49 selections had lease agreements that had expired before the start date of the applicable grant agreement’s period of performance. During our testing of rental payments for rent reasonableness, 8 out of 23 selections had lease agreements that had expired before the start date of the applicable grant agreement; thereby we were unable to verify the reasonableness of the rent paid via a current lease agreement. Between the two tests performed above, 3 selections with exceptions overlapped within the tests. Cause: There was no evidence that management obtained a renewed lease agreement or verified with the landlord that the leases were renewed prior to making payments on the expired lease agreements. Effect: Payments could be made for inaccurate or to apartment/housing units that do not have valid lease agreements or that are unoccupied. Questioned Costs: According to 2 CFR 200, questioned costs are cost that, at the time of the audit, lacked adequate documentation to support compliance. As current lease agreements were not obtained or provided, we were unable to validate the rent amounts paid were accurate against a valid and current lease agreement. The total of the rental payments made for participants related to the 8 selections for period of performance testing aggregated to $99,966. The total of the rental payments made for participants related to the 8 selections for rent reasonableness testing aggregated to $97,146. The total of the rental payments made for participants associated with the 3 common selections with exceptions between the two tests aggregated to $44,297. Recommendation: The Division should ensure that current and valid lease agreements for the period are obtained prior to making rental assistance payments. Such agreements should demonstrate review and approval of rent reasonableness in accordance with the requirements of 24 CFR section 578.49(b)(1). Views of Responsible Individuals: See Corrective Action Plan.

Federal Agency: U.S. Department of Housing and Urban Development Direct Grant Number: OR0135L0E012110 Pass through Grantor: Idaho Housing and Finance Association Pass through Contract: ID0080U0E012105/ID0080U0E012206 Federal Program(s): Continuum of Care Program Assistance Listing Number(s): 14.267 Criteria: In accordance with (24 CFR section 578.49(b)(1)), the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space. Condition/ Context: During our testing of rental payments for rent reasonableness, 14 out of 23 selections had Rent Reasonableness forms that did not have evidence of review. Cause: The shelter that managed the intake of rental payment applications had turnover of management personnel responsible for intake forms during the fiscal year, which caused lapses in the review process. Effect: Payments could be made for apartment/housing units that are above the market rate. Questioned Costs: None Recommendation: The Division should ensure that the rent reasonableness forms are properly reviewed and approved prior to making rental assistance payments. Views of Responsible Individuals: See Corrective Action Plan.

Finding 2023‐005—Allowability—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE Federal Program: Emergency Food Assistance Program (Administrative Costs) & The Emergency Food Assistance Program (“TEFAP”) (Food Commodities)—Food Distribution Cluster Assistance Listing Number: 10.565, 10.568 and 10.569 Year(s): 2023 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank and CAPK Food Bank. Criteria—In accordance with 2 CFR 200.502(g), Federal non-cash assistance food commodities received as part of a Federal award to carry out a Federal program must be valued at fair market value at the time of receipt or the assessed value provided by the Federal agency and must be included in determining Federal awards expended under this part. Condition and Context—We selected 60 food commodity delivery receipts to sub-recipients (Sub—ERA’s) for testing; 11 selections did not have evidence of review, indicating a gap in the related internal controls. The delivery receipt includes the quantity of the food commodities distributed to sub-recipients. The monetary value of those food commodities is included in the Schedule. We also made 2 sign-in-sheet selections which contained the quantity of food commodity items that were distributed which were then used to populate the Schedule. The 2 sign-in-sheet selections did not have evidence of review. The monetary value of those food commodities is then included in the Schedule. Cause—Management did not have a control in place to ensure that evidence pertaining to the of review of the distribution of the food commodity items were required to be maintained. Effect—Lack of sufficient and appropriate recordkeeping can lead to food theft or misuse as well as incorrect information being communicated to the grantor which may lead to the eventual cessation of grant funding. Questioned Costs—None. Repeat Finding from Prior Year—Yes. Recommendation—We recommend that management implements a control to ensure that proper evidence of review is maintained. View of Responsible Officials—See Corrective Action Plan.

Finding 2023-006 Eligibility—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE AND MATERIAL NON-COMPLIANCE Federal Program: Emergency Food Assistance Program (Administrative Costs) & The Emergency Food Assistance Program (“TEFAP”) (Food Commodities)—Food Distribution Cluster Assistance Listing Number: 10.565, 10.568 and 10.569 Year(s): 2023 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank and CAPK Food Bank. Criteria—In accordance with the Code of Federal Regulations, a sub recipient must be either a public agency or a private entity possessing tax-exempt status under the Internal Revenue Code and must enter into a written agreement with the state agency, or with another recipient agency where permitted, binding it to perform the duties of a recipient agency (7 CFR sections 247.4, 247.7(a), 251.3(d), and 251.5(a)). Individual recipients must sign the Certificate of eligibility form (EFA-7), which is a self-declaration that they meet all the eligibility requirements to participate in in the program. Specifically, the participants are required to self-declare their household’s gross income is at or below the applicable TEFAP income guideline amount and they are prohibited from selling, bartering, or trading food received through this program. Condition and Context—We made a total of 6 selections for the agreements signed with the sub-recipients (“Sub ERAs”), of which 2 Sub ERAs did not have signed agreements. To test the eligibility of individual recipients, we made a total of 60 selections of individuals who received food commodities from warehouses that maintained self-declaration forms. Of the 60 selections, there was no evidence that 7 of the individuals signed the self-declaration form. Additionally, the Division managed distribution sites that collectively distributed approximately $956,107 worth of food commodities that did not require or maintain self-declaration forms for the participants. Cause—Management did not have a control in place to ensure that the agreements with the sub recipients are required to be maintained and certain distributions sites did not have controls in place to implement the grant requirements requiring individuals to self-certify their eligibility. Effect—Ineligible Sub-recipients or individual participants could receive grant funded food commodities, which can lead to the grantor withholding future funding. Questioned Costs—$956,107. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management to implement a control to ensure sub-recipient agreements are retained and the distribution sites maintain sign-in sheets requiring participants to self-certify they meet the grant eligibility requirements. View of Responsible Officials—See Corrective Action Plan.

Finding 2023‐007—Special Test-Accountability for USDA Foods—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE AND MATERIAL NON-COMPLIANCE Federal Program: Emergency Food Assistance Program (Administrative Costs) & The Emergency Food Assistance Program (“TEFAP”) (Food Commodities)—Food Distribution Cluster Assistance Listing Number: 10.565, 10.568 and 10.569 Year(s): 2023 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank and CAPK Food Bank. Criteria—Accurate and complete records must be maintained with respect to the receipt, distribution/use, and inventory of USDA Foods, including end products processed from USDA Foods in TEFAP. Failure to maintain records required by 7 CFR section 250.19 is considered prima facie evidence of improper distribution or loss of USDA Foods and the agency processor or entity is liable for the value of the food or replacement of the food in kind (7 CFR sections 250.16 and 250.19(a)). Condition and Context—There was no documentation of inventory reports or evidence that inventory counts were performed for the period under audit. Cause—Management did not have a control in place to ensure that the retention of the documentation evidencing the performance of inventory counts was required. Effect—Failure to maintain records required by 7 CFR section 250.19 could result in the Entity being held liable for the costs of the related food commodities. Questioned Cost—Cannot be determined due to the lack of inventory reports. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management implements a control to ensure the documentation related to inventory counts are maintained. View of Responsible Officials—See Corrective Action Plan.

Reference Number: 2022-001 Prior Year Finding: Yes – 2021-001 Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material Weakness, Noncompliance Criteria or specific requirement: As per § 200.318 General procurement standards. (a) The Non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (d) The Non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Based on our review of the Procurement compliance requirements, we noted that the Division has written procurement policies and competitive policies as required by CFR § 200.318 General procurement standards. We selected five (5) vendors for procurement Suspension and Debarment compliance testing of total population of 5 vendors subject to procurement and we were not provided with Procurement comparative bids therefore, we were unable: • To verify that the procurement method used was appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. • To Verify that procurements provide full and open competition (2 CFR section 200.319 and 48 CFR section 52.244-5). Cause: The Division did not ensured that as a non-Federal entity must have and must use documented procurement procedures, consistent with State, and local laws and regulations and the standards of §§ 200.318 through 200.327, for the acquisition of property or services required under a Federal award or subaward. Effect: The funding agency can reject the expenditures incurred by the Division on certain vendors where the Division must use procurement method appropriately based on the dollar amount and conditions specified in 2 CFR section 200.320. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • Use documented procurement procedures, consistent with State, and local, laws and regulations and the standards, for the acquisition of property or services required under a federal award or subaward. • The Division must maintain records sufficient to detail the history of procurement. These records should include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials: The Division will work with Territorial Headquarters to document procedures as outlined in the Recommendations above. See corrective action plan.

Reference Number: 2022‐001 Prior Year Finding: Yes – 2021‐002 Federal Agency: U.S. Department of Housing and Urban Development Pass‐through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material Weakness, Noncompliance Criteria or Specific Requirement: As per § 200.318 General procurement standards. (a) The non‐federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non‐federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non‐federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. (c) The non‐federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Based on our review of the procurement compliance requirements, we noted that the Division has written procurement policies and competitive policies as required by CFR § 200.318 General procurement standards. We selected three (3) vendors for procurement, suspension and debarment compliance testing of total population of 8 vendors subject to procurement and we were not provided with procurement comparative bids; therefore, we were unable: • To verify that the procurement method used was appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. • To verify that procurements provide full and open competition (2 CFR section 200.319 and 48 CFR section 52.244‐5). Cause: The Division did not ensure that as a non‐federal entity that they used documented procurement procedures, consistent with state, and local laws and regulations and the standards of §§ 200.318 through 200.327, for the acquisition of property or services required under a federal award or subaward. Effect: The funding agency can reject the expenditures incurred by the Division on certain vendors where the Division must use procurement methods appropriately based on the dollar amount and conditions specified in 2 CFR section 200.320. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must:  Document procurement procedures, consistent with state and local laws and regulations and the standards for the acquisition of property or services required under a federal award or subaward.  Ensure that the Division’s documented procurement procedures conform to the procurement standards identified in §§ 200.318 through 200.327. They must ensure that they maintain records sufficient to detail the history of procurement. These records should include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials: The Division will document appropriate procurement procedures and maintain supporting documentation in accordance with the recommendations above. See corrective action plan.

Reference Number: 2022-001 Prior Year Finding: Yes – 2021-001 Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material Weakness, Material Noncompliance Criteria or specific requirement: As per § 200.318 General procurement standards. (a) The Non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (d) The Non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Based on our review of the Procurement compliance requirements, we noted that the Division has written procurement policies and competitive policies as required by CFR § 200.318 General procurement standards. We selected five (5) vendors for procurement Suspension and Debarment compliance testing of total population of 5 vendors subject to procurement and we were not provided with Procurement comparative bids therefore, we were unable: • To verify that the procurement method used was appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. • To Verify that procurements provide full and open competition (2 CFR section 200.319 and 48 CFR section 52.244-5). Cause: The Division did not ensured that as a non-Federal entity must have and must use documented procurement procedures, consistent with State, and local laws and regulations and the standards of §§ 200.318 through 200.327, for the acquisition of property or services required under a Federal award or subaward. Effect: The funding agency can reject the expenditures incurred by the Division on certain vendors where the Division must use procurement method appropriately based on the dollar amount and conditions specified in 2 CFR section 200.320. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • Use documented procurement procedures, consistent with State, and local, laws and regulations and the standards, for the acquisition of property or services required under a federal award or subaward. • The Division must maintain records sufficient to detail the history of procurement. These records should include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of responsible officials: The Division will work with Territorial Headquarters to document procedures as outlined in the Recommendations above. See corrective action plan.

Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) 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 federal award identification number), who holds title, the acquisition date, 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 sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.

Reference Number: 2022‐002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass‐through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Equipment Management ‐‐ Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per‐unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non‐federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non‐federal entity under grants and cooperative agreements vests in the non‐federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non‐federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (a) 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 federal award identification number), who holds title, the acquisition date, 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 sales price of the property (2 CFR section 200.313(d)(1)). (b) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real Property management. We noted that the Division’s property records did not include all required elements as required by 2 CFR section 200.313(d)(1). We also noted that physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non‐federal entity that: (1) The Division’s property records include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. (2) A physical inventory of the property be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: (1) Maintain property records that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. (2) Ensure that a physical inventory of the property is taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on equipment and real property within their asset records and take a physical inventory at least once every two years. See corrective action plan.

Reference Number: 2022-002 Repeat Finding: Yes Prior Year Finding: 2021-002 Federal Agency: Veterans Health Administration Federal Program: VA Homeless Providers Grant and Per Diem Program ALN Number: 64.024 Contract Number: SACA347-1518-692-PD-21; SACA347-1498-648-PD-21; SACA347A3-2518-648-CG-22 Compliance Requirement: Eligibility Type of Finding: Material Weakness, Noncompliance Criteria or specific requirement: Applicants eligible for grants include public and nonprofit private entities with the capacity to effectively administer a grant; which demonstrate that adequate financial support will be available to carry out the project; and which agree to and demonstrate capacity to meet the applicable criteria and requirements of the grant program. Applicants eligible for per diem payments include public or nonprofit private entities who are either grant recipients, or who are eligible to receive a grant. Programs eligible for coverage under per diem payments must have been established after November 10, 1992. Beneficiary Eligibility: Veterans, meaning a person who served in the active military, naval or air service, and who was discharged or released there from under conditions other than dishonorable. Condition: The Division provides eligible expenses for the veterans who require financial support. Veterans Health Administration determines eligibility of a veteran. Based on our review of the eligibility for veterans who received financial support from the Division, we were not provided required eligibility confirmation documentation from the Veterans Health Administration for thirteen of the thirteen samples we selected for eligibility; therefore, we were not able to determine eligibility of the veterans receiving the financial support from the Division. Questioned costs: Cannot be determined. Cause: The Division did not ensure to document and preserve eligibility documentation for the veterans who receive financial support from the Division. Effect: The federal agency may deny veterans financial support as non-allowable costs. Recommendation: We recommend that the Division ensure that all eligible veterans eligibility documentation are available for review. Views of Responsible Officials: Every veteran has to be enrolled and verified by our VA for eligibility, which is always double checked in the Veterans Informational System. Going forward documentation of the verification process will be maintained with an email from the VA liaison stating the eligibility of the Veteran. Also see “Corrective Action Plan”.

Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) 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 federal award identification number), who holds title, the acquisition date, 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 sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.

Reference Number: 2022-003 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: OTHER - BASIS OF ACCOUNTING Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Basis of Accounting —Uniform Guidance states the basis of accounting used may be a special purpose framework. However, it does state that the determination of when an award is expended must be based on when the activity related to the federal award occurs. Uniform Guidance also states for Grants, cost reimbursement contracts, cooperative agreements, and direct appropriation type of contracts, the federal expenditure or expense should be reported when the transaction occurs. Uniform Guidance further states, the auditee should also be able to reconcile amounts presented in the financial statements to related amounts in the schedule of expenditures of federal awards. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. Division report to the pass-through entity on an accrual basis. Division’s schedule of expenditures of federal awards is presented on the accrual basis of accounting. Of the Sixty (60) files selected for testing: • Five (5) prior year expenditures were included in Division’s current year schedule of expenditures of federal awards. Cause: Division did not ensure that all program expenditures were reported in the correct year in the Division’s schedule of expenditures of federal awards. Effect: Division’s schedule of expenditures of federal awards was not reconciled with the current year program expenditures recorded in the financial statements. Questioned costs: Cannot be determined. Recommendation: We recommend Division report program expenditures in the year expenditures were accrued. Views of responsible officials: The Division will report program expenditures in the year expenditures were accrued. See corrective action plan.

Reference Number: 2022-003 Repeat Finding: No Prior Year Finding: Not Applicable Federal Agency: Veterans Health Administration Federal Program: VA Homeless Providers Grant and Per Diem Program ALN Number: 64.024 Contract Number: SACA347-1518-692-PD-21; SACA347-1498-648-PD-21 SACA347A3-2518-648-CG-22 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (a) 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 federal award identification number), who holds title, the acquisition date, 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 sales price of the property (2 CFR section 200.313(d)(1)). (b) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real Property management. We noted that the Division’s property records did not include all required elements as required by 2 CFR section 200.313(d)(1). We also noted that physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-federal entity that: (1) The Division’s property records include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. (2) A physical inventory of the property be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in complaince with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: (1) Maintain property records that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. (2) Ensure that a physical inventory of the property is taken and the results reconciled with the property records at least once every two years. Views of responsible officials: The Federal fixed assets have been tagged and an inventory completed to bring the division into compliance. The federal fixed assets have been added to our fixed asset module for tracking purposes and record of the last inventory. See corrective action plan.

Reference Number: 2022-003 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: OTHER - BASIS OF ACCOUNTING Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Basis of Accounting —Uniform Guidance states the basis of accounting used may be a special purpose framework. However, it does state that the determination of when an award is expended must be based on when the activity related to the federal award occurs. Uniform Guidance also states for Grants, cost reimbursement contracts, cooperative agreements, and direct appropriation type of contracts, the federal expenditure or expense should be reported when the transaction occurs. Uniform Guidance further states, the auditee should also be able to reconcile amounts presented in the financial statements to related amounts in the schedule of expenditures of federal awards. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. Division report to the pass-through entity on an accrual basis. Division’s schedule of expenditures of federal awards is presented on the accrual basis of accounting. Of the Sixty (60) files selected for testing: • Five (5) prior year expenditures were included in Division’s current year schedule of expenditures of federal awards. Cause: Division did not ensure that all program expenditures were reported in the correct year in the Division’s schedule of expenditures of federal awards. Effect: Division’s schedule of expenditures of federal awards was not reconciled with the current year program expenditures recorded in the financial statements. Questioned costs: Cannot be determined. Recommendation: We recommend Division report program expenditures in the year expenditures were accrued. Views of responsible officials: The Division will report program expenditures in the year expenditures were accrued. See corrective action plan.

Reference Number: 2022-004 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Cash Management Type of Finding: Material Weakness, Non-compliance Criteria or specific requirement: Non-Federal Entities Other Than States Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). What constitutes minimized elapsed time for funds transfer will depend on what payment system/method a non-federal entity uses. Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR section 200.3). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the US Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR section 200.305(b)(1)). Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. Division receives advance funds from the pass-through agency and incurred program expenditures. Of the Sixty (60) files selected for testing We noted that the Division: (1) Does not have written procedures that minimize the time elapsing between the transfer of funds from the Pass-through entity and disbursement by the Division. Cause: Division did not minimize the time elapsing between the transfer of funds from the Pass-through entity and disbursement by the Division. Effect: Division’s will be in noncompliance with its cash management compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division minimize the time elapsing between the transfer of funds from the Pass-through entity and disbursement by the Division. Views of responsible officials: The Division will strive to minimize the time elapsing between the transfer of funds from the Pass-through entity and disbursement by the Division See corrective action plan.

Reference Number: 2022-004 Repeat finding: No Prior Year Finding: Not Applicable Federal Agency: US Department of Housing and Urban Development Federal Program: Emergency Solutions Grants Program State Agency Idaho Housing and Finance Administration ALN Number: 14.231 Contract Number: ESG CV-20-09; 20-35; E-21 DC-16-001; E-20 DW-16-001 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (a) 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 federal award identification number), who holds title, the acquisition date, 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 sales price of the property (2 CFR section 200.313(d)(1)). (b) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real Property management. We noted that the Division’s property records did not include all required elements as required by 2 CFR section 200.313(d)(1). We also noted that physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-federal entity that: (1) The Division’s property records include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. (2) A physical inventory of the property be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in complaince with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: (3) Maintain property records that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. (4) Ensure that a physical inventory of the property is taken and the results reconciled with the property records at least once every two years. Views of responsible officials: The Federal fixed assets have been tagged and an inventory completed to bring the division into compliance. The federal fixed assets have been added to our fixed asset module for tracking purposes and record of the last inventory. See corrective action plan.

Reference Number: 2022-004 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Cash Management Type of Finding: Material Weakness, Material Non-compliance Criteria or specific requirement: Non-Federal Entities Other Than States Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). What constitutes minimized elapsed time for funds transfer will depend on what payment system/method a non-federal entity uses. Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR section 200.3). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the US Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR section 200.305(b)(1)). Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. Division receives advance funds from the pass-through agency and incurred program expenditures. Of the Sixty (60) files selected for testing We noted that the Division: (1) Does not have written procedures that minimize the time elapsing between the transfer of funds from the Pass-through entity and disbursement by the Division. Cause: Division did not minimize the time elapsing between the transfer of funds from the Pass-through entity and disbursement by the Division. Effect: Division’s will be in noncompliance with its cash management compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division minimize the time elapsing between the transfer of funds from the Pass-through entity and disbursement by the Division. Views of responsible officials: The Division will strive to minimize the time elapsing between the transfer of funds from the Pass-through entity and disbursement by the Division See corrective action plan.

Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.

Reference Number: 2022-005 Repeat Finding: No Prior Year Finding: Not Applicable Federal Agency: US Department of Housing and Urban Development Federal Program: Emergency Solutions Grants Program State Agency Idaho Housing and Finance Administration ALN Number: 14.231 Compliance Requirement: Matching Contract Number: E-21-DC-16-001 Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Matching or cost sharing includes requirements to provide contributions (usually nonfederal) of a specified amount or percentage to match federal awards. Matching may be in the form of allowable costs incurred or in-kind contributions (including third party in-kind contributions). Condition: The Division is required to match 100 percent of expenditures for one of the pass-through programs. Based on our review of the matching compliance requirements, we noted that the Division has program expenditures greater then the amount funded by the pass-through agency, but the Division has not documented which specific expenditures are related to the matching for the program. Cause: Division did not document specific allowable matching expenditures that were used to comply with the matching requirements of the contract. Effect: Division is not in complaince with federal compliance requirements for matching requirements. Questioned costs: Cannot be determined Recommendation: We recommend that the Division document all allowable matching expenditures related to contracts which require matching funding from the Division. Views of responsible officials: Division will reclass the match portion of the grant to the grant as well with a grant sub source code to track match portion in the same manner as the grant expenditures. See corrective action plan.

Reference Number: 2022-005 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security/FEMA Pass-through Agency: Various Federal Program: Emergency Food and Shelter National Board Program ALN Number: 97.024 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency, Non-compliance Criteria or specific requirement: Compliance Supplement Requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Division receive Emergency Food and Shelter National Board Program funds from the U.S. Department Homeland security/FEMA and various pass-through entities. The Division’s pass-through Contract requires period of performance and also requires funds must be expended by certain date. Of the Sixty (60) files selected for testing We noted that the Division: • For 4 samples, we noted that Division program expenses were recorded prior to Contract starting date. Cause: Division did not ensure that Division may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Effect: Division’s will be in noncompliance with its Period of Performance compliance. Questioned costs: Cannot be determined. Recommendation: We recommend Division charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. Views of responsible officials: The Division will charge only allowable costs incurred during the approved budget period of a pass-through award’s period of performance and any costs incurred before the pass-through entity made the federal award that were authorized by the pass-through entity. See corrective action plan.

Reference Number: 2022-006 Repeat Finding: No Prior Year Finding: Not Applicable Federal Agency: US Department of Housing and Urban Development State Agency: Idaho Housing and Finance Administration Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Contract Number: ESG CV-20-09; 20-35; E-21 DC-16-001; E-20 DW-16-001 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material Weakness, Noncompliance Criteria or specific requirement: As per § 200.318 General procurement standards (a) The non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non-federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. (c) The non-federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Based on our review of the procurement compliance requirements, we noted that the Division has written procurement policies and competitive policies as required by CFR § 200.318 General procurement standards. We selected one (1) vendor for procurement, suspension and debarment compliance testing from a total population of 1 vendor subject to procurement and we were not provided with procurement comparative bids; therefore, we were unable: • To verify that the procurement method used was appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. • To verify that procurements provide full and open competition (2 CFR section 200.319 and 48 CFR section 52.244-5). Cause: The Division did not ensure that as a non-federal entity that they used documented procurement procedures, consistent with state, and local laws and regulations and the standards of §§ 200.318 through 200.327, for the acquisition of property or services required under a federal award or subaward. Effect: The funding agency can reject the expenditures incurred by the Division on certain vendors where the Division must use procurement method appropriately based on the dollar amount and conditions specified in 2 CFR section 200.320. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • Document procurement procedures, consistent with state, and local, laws and regulations and the standards, for the acquisition of property or services required under a federal award or subaward. • Ensure that the Division’s documented procurement procedures conform to the procurement standards identified in §§ 200.318 through 200.327. Views of responsible officials: Division will addresss maintenance of procurement records on grants, which include competitive bid information on grant contract purchases. See corrective action plan.

Reference Number: 2022–007 Prior Year Finding: No Federal Agency: US Department of Agriculture (USDA) Pass-through Agency: Various Federal Program: The Food Distribution Cluster ALN Number: Various Compliance Requirement: Allowable Cost Type of Finding: Material Weakness, Non-compliance Criteria or specific requirement: In accordance with 200.502(g), Federal non-cash assistance food commodities received as part of a Federal award to carry out a Federal program must be valued at fair market value at the time of receipt or the assessed value provided by the Federal agency and must be included in determining Federal awards expended under this part. Condition: We selected 60 food commodity delivery receipts to sub-recipients (Sub – ERA’s) for testing; 16 selections did not have evidence of review. The delivery receipt includes the quantity of the food commodities distributed to sub-recipients. The monetary value of those food commodities is included in the SEFA. We also made 2 sign-in-sheet selections which contained the quantity of food commodity items that were distributed which were then used to populate the SEFA. The 2 sign-in-sheet selections did not have evidence of review. Further, out of the 60 selections tested for allowable costs, 13 selections pertaining to the food commodities did not have adequate support. As the food commodity distribution support did not include the weight of the commodities distributed, management used estimated weight of the food commodities rather than the actual weight of the items. The estimated weight of the food distributed was then converted to monetary value by multiplying it by a rate per pound which was calculated using data from the pass-through agencies, when recording on the SEFA. One of the selections had a difference of 10 boxes distributed between what was recorded on the SEFA and what was reflected on the underlying support. Cause: Management was not aware that evidence pertaining to the of review of the distribution of the food commodity items and the associated weight of those items was required to be maintained. Effect: Lack of sufficient and appropriate recordkeeping can lead to food theft or misuse as well as incorrect information being communicated to the grantor which may lead to the eventual cessation of grant funding. Questioned Costs: None. Recommendation: We recommend that management takes steps to ensure that proper evidence of review is maintained. Further, management should ensure proper documentation of the weight of items distributed is retained. Views of responsible officials: See Corrective Action Plan.

Reference Number: 2022–008 Prior Year Finding: No Federal Agency: US Department of Agriculture (USDA) Pass-through Agency: Various Federal Program: The Food Distribution Cluster ALN Number: Various Compliance Requirement: Eligibility Type of Finding: Material Weakness, Material Non-compliance Criteria or specific requirement: In accordance with the Code of Federal Regulations a sub recipient must be either a public agency or a private entity possessing tax-exempt status under the Internal Revenue Code and must enter into a written agreement with the state agency, or with another recipient agency where permitted, binding it to perform the duties of a recipient agency (7 CFR sections 247.4, 247.7(a), 251.3(d), and 251.5(a)). Individual recipients must sign the Certificate of eligibility form (EFA-7), which is a self-declaration that they meet all the eligibility requirements to participate in in the program. Specifically, the participants are required to self-declare their household’s gross income is at or below the applicable TEFAP income guideline amount and they are prohibited from selling, bartering, or trading food received through this program. Condition: We made a total of 23 selections for the agreements signed with the sub-recipients (“Sub ERAs”), of which 4 Sub ERAs did not have signed agreements. To test the eligibility of individual recipients, we made a total of 60 selections of individuals who received food commodities from warehouses that maintained self-declaration forms. Of the 60 selections, there was no evidence that 14 of the individuals signed the self-declaration form. Additionally, the Division managed distribution sites that collectively distributed approximately $637,969 worth of food commodities that did not require or maintain self-declaration forms for the participants. Cause: Management was not aware that that the agreements with the sub recipients are required to be maintained and certain distributions sites were not aware of the grant requirements requiring individuals to self-certify their eligibility. Effect: Ineligible Sub-recipients or individual participants could receive grant funded food commodities, which can lead to the grantor withholding future funding. Questioned Costs: $637,969 Recommendation: We recommend management take steps to ensure sub-recipient agreements are retained and the distribution sites maintain sign-in sheets requiring participants to self-certify they meet the grant eligibility requirements. Views of responsible officials: See Corrective Action Plan.

Reference Number: 2022–009 Prior Year Finding: No Federal Agency: US Department of Agriculture (USDA) Pass-through Agency: Various Federal Program: The Food Distribution Cluster ALN Number: Various Compliance Requirement: Special Test—Accountability for USDA Foods Type of Finding: Material Weakness, Material Non-compliance Criteria or specific requirement: Accurate and complete records must be maintained with respect to the receipt, distribution/use, and inventory of USDA Foods, including end products processed from USDA Foods in TEFAP. Failure to maintain records required by 7 CFR section 250.19 is considered prima facie evidence of improper distribution or loss of USDA Foods and the agency processor or entity is liable for the value of the food or replacement of the food in kind (7 CFR sections 250.16 and 250.19(a)). Condition: There was no documentation of inventory reports or evidence that inventory counts were performed for the period under audit. Cause: Management was not aware that the retention of the documentation evidencing the performance of inventory counts was required. Effect: Failure to maintain records required by 7 CFR section 250.19 could result in the Division being held liable for the costs of the related food commodities. Questioned Cost: Cannot be determined due to the lack of inventory reports. Recommendation: We recommend management take steps to ensure the documentation related to inventory counts are maintained. View of Responsible Officials: See Corrective Action Plan.

Reference Number: 2021-001 Prior Year Finding: No Federal Agency: U.S. Department of Veterans Affairs Profit Pass-through Agency: Sacred heart Community Services Federal Program: VA Homeless Veterans Providers Grant and Per Diem ALN Number: 64.024 Compliance Requirement: Reporting Type of Finding: Deficiency, Noncompliance Criteria or specific requirement: As per grant agreement- The Division will provide Sacred heart Community Services (SHCS) monthly invoicing for both Homelessness Prevention System (HPS) and Homelessness Prevention System CARES (HPS-CV) by the tenth day of each month with supporting documentation including timecards, payroll registers, check registers, and copies of all checks as detailed in invoice documents. Throughout the term of this MOU, SHCS may change the invoice reporting process, or incorporate additional reporting requirements, for supporting and reporting detailed expenditures incurred. TSA will be responsible for ensuring they understand all reporting requirements and compliance. Condition: Based on our review of the reporting requirements, we noted that the Division did not submit the required reports within the time frame prescribed by the pass-through entity and federal awarding agency. Cause: The Division did not ensure that reports should be submitted within required due date. Effect: The funding agency can reject the report and terminate the reimbursement request. Questioned costs: None. Recommendation: We recommend that the Division submit the required reports on a timely basis. Views of responsible officials and Planned Corrective Actions: Divisional Headquarters and the local units will review deadlines and submit the required reports on a timely basis. See corrective action plan.

Reference Number: 2021-002 Prior Year Finding: No Federal Agency (ALN 14.231): U.S. Department of Housing and Urban Development State Agency: State of California- Department of Housing and Community Development Federal Programs: Emergency Solutions Grant Program; ALN Numbers: 14.231 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material Weakness, Noncompliance Criteria or specific requirement: As per ? 200.318 General procurement standards. (a) The Non-Federal entity must have and use documented procurement procedures, consistent with State, and local, laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. (c) The Non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach. (d) To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. (e) The Non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Based on our review of the Procurement compliance requirements, we noted that the Division did not have Written procurement policies and competitive policies as required by CFR ? 200.318 General procurement standards. We selected five vendors for procurement compliance testing and we were not provided with written procurement policies and Procurement comparative policies, therefore, we were unable: (1) To verify that the procurement method used was appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. (2) To Verify that procurements provide full and open competition (2 CFR section 200.319 and 48 CFR section 52.244-5). (3) To examine documentation in support of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified (2 CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5). Cause: The Division did not ensure that as a non-Federal entity must have and must use documented procurement procedures, consistent with State, and local laws and regulations and the standards of ?? 200.318 through 200.327, for the acquisition of property or services required under a Federal award or subaward. Effect: The funding agency can reject the expenditures incurred by the Division on certain vendors where the Division must use procurement method appropriately based on the dollar amount and conditions specified in 2 CFR section 200.320. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: (1) document procurement procedures, consistent with State, and local, laws and regulations and the standards, for the acquisition of property or services required under a federal award or subaward. (2) The Division?s documented procurement procedures must conform to the procurement standards identified in ?? 200.318 through 200.327. Views of responsible officials: The Division will work with Territorial Headquarters to document procedures as outlined in the Recommendations above. See corrective action plan.

Reference Number: 2021-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development State Agency: State of California- Department of Housing and Community Development Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material Weakness, Noncompliance Criteria or specific requirement: As per ? 200.318 General procurement standards. (a) The Non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. (c) The Non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach. (d) To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. (d) The Non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Based on our review of the Procurement compliance requirements, we noted that the Division did not have Witten procurement policies and competitive policies as required by CFR ? 200.318 General procurement standards. We selected five vendors for procurement compliance testing and we were not provided with written procurement policies and Procurement comparative policies, therefore, we were unable: (1) To verify that the procurement method used was appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. (2) To Verify that procurements provide full and open competition (2 CFR section 200.319 and 48 CFR section 52.244-5). (3) To examine documentation in support of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified (2 CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5). Cause: The Division did not ensured that as a non-Federal entity must have and must use documented procurement procedures, consistent with State, and local laws and regulations and the standards of ?? 200.318 through 200.327, for the acquisition of property or services required under a Federal award or subaward. Effect: The funding agency can reject the expenditures incurred by the Division on certain vendors where the Division must use procurement method appropriately based on the dollar amount and conditions specified in 2 CFR section 200.320. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: (1) document procurement procedures, consistent with State, and local, laws and regulations and the standards, for the acquisition of property or services required under a federal award or subaward. (2) The Division?s documented procurement procedures must conform to the procurement standards identified in ?? 200.318 through 200.327. Views of responsible officials: The Division will work with Territorial Headquarters to document procedures as outlined in the Recommendations above. See corrective action plan.

Reference Number: 2021-002 Prior Year Finding: No Federal Agency: Veterans Health Administration Federal Program: VA Homeless Providers Grant and Per Diem Program ALN Number: 64.024 Compliance Requirement: Eligibility Type of Finding: Material weakness, Noncompliance Criteria or specific requirement: Applicants eligible for grants include public and nonprofit private entities with the capacity to effectively administer a grant; which demonstrate that adequate financial support will be available to carry out the project; and which agree to and demonstrate capacity to meet the applicable criteria and requirements of the grant program. Applicants eligible for per diem payments include public or nonprofit private entities who are either grant recipients, or who are eligible to receive a grant. Programs eligible for coverage under per diem payments must have been established after November 10, 1992. Beneficiary Eligibility: Veterans, meaning a person who served in the active military, naval or air service, and who was discharged or released there from under conditions other than dishonorable. Condition: The Division provides eligible expenses for the veterans who requires financial support. Based on our review of the eligibility requirements for Veterans who received financial support from the Division, we were not provided required eligibility documentation for three of the fifteen samples we selected for eligibility; therefore, we were not able to determine eligibility of the Veterans receiving the financial supports from the Division. Questioned costs: Cannot be determined. Cause: The Division did not ensure to document and preserve eligibility documentation for the Veterans who receives Financial Support from the Division. Effect: The federal agency may deny this Veterans financial support as non-allowable costs. Recommendation: We recommend that the Division ensure that all eligible Veterans eligibility documentation are available for review. Views of Responsible Officials and Planned Corrective Actions: Management of Cascade will emphasize the importance of ensuring that recipient eligibility is properly determined and documented on a timely basis and will ensure that all eligible Veterans eligibility documentation is complete and accurate. Also see ?Corrective Action Plan?.

Reference Number: 2020-002 Repeat Finding: 2021-002 Federal Agency (ALN 14.231): U.S. Department of Housing and Urban Development Funding Agency: Various Federal Programs: Emergency Solutions Grant Program. ALN Numbers: 14.231 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material Weakness, Noncompliance Criteria or specific requirement: As per ? 200.318 General procurement standards. 1. The Non-Federal entity must have and use documented procurement procedures, consistent with state, and local, laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity?s documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. 2. Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. 3. The Non-Federal entity?s procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach. 4. To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter- entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. 5. The Non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Based on our review of the Procurement compliance requirements, we noted that the Division have written procurement policies and competitive policies as required by CFR ? 200.318 General procurement standards. We selected one out of two vendors for procurement compliance testing and we were not provided with the procurement comparative method used for the vendor, therefore, we were unable: ? To verify that the procurement method used was appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. ? To verify that procurements provide full and open competition (2 CFR section 200.319 and 48 CFR section 52.244-5). ? To examine documentation in support of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified (2 CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5). Cause: The Division did not ensure that as a non-Federal entity that they had and used documented procurement procedures, consistent with state and local laws and regulations and the standards of ?? 200.318 through 200.327, for the acquisition of property or services required under a federal award or subaward. Effect: The funding agency can reject the expenditures incurred by the Division on certain vendors where the Division must use procurement method appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Questioned Costs: Cannot be determined Recommendation: We recommend that: (a) The Division?s documented procurement procedures must conform to the procurement standards identified in ?? 200.318 through 200.327. Views of Responsible Officials: The Division will work with Territorial Headquarters to implement written procurement standards as outlined in the recommendations. See corrective action plan.

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