TOWN OF GYPSUM TOWN HALL

PART II: FINDINGS RELATED TO THE REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Finding #25-001 – Significant Deficiency in Internal Control over Financial Reporting: Suspension & Debarment Program Names: Gypsum Sewer Collection Main Planning & Replacement CFDA Titles and Numbers: 15.437 Energy & Mineral Impact Assistance Programs 9693 & 9809 Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2025 Condition: The Town of Gypsum, Colorado, does not have policies and procedures in place to ensure that they do not contract with or make awards to parties that are suspended or debarred, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Gypsum, Colorado, must comply with procurement, suspension & debarment standards set out at 2 CFR section 200.303 et al. within Uniform Guidance. Per 2CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2CFR 200.213 Suspension and Debarment restricts awards, subawards, and contracts within certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2CFR 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM (System for Award Management) Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person Questioned Costs: N/A Context: Although the Town of Gypsum, Colorado, does not have policies or procedures in place to ensure that they do not contract with or make subawards to parties that are suspended or debarred, we did not identify any instances where Federal grant awards were paid to suspended or debarred vendors for 5 of 5 suspension and debarment transactions selected for testing. However, 2 of 5 did not hold an active registration with Sam.gov. Cause: Management was not aware of the requirements for determining suspension and debarment status under 2CFR section 180 within Uniform Guidance. Effect: The Town of Gypsum, Colorado, is at risk for noncompliance with Federal grants as it relates to suspension and debarment. G8 Finding #25-001 – Significant Deficiency in Internal Control over Financial Reporting: Suspension & Debarment - continued Recommendation: We recommend that the Town of Gypsum, Colorado, implement policies and procedures to ensure that potential vendors are not suspended or debarred prior to contracting with them for goods and services. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will implement policies and procedures to ensure that potential vendors are not suspended or debarred prior to contracting with them for goods and services.

PART III: FINDINGS RELATED TO THE REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE Finding #25-002 – Suspension and Debarment Program Names: Gypsum Sewer Collection Main Planning & Replacement CFDA Titles and Numbers: 15.437 Energy & Mineral Impact Assistance Programs 9693 & 9809 Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2025 Condition: The Town of Gypsum, Colorado, does not have policies and procedures in place to ensure that they do not contract with or make awards to parties that are suspended or debarred, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Gypsum, Colorado, must comply with procurement, suspension & debarment standards set out at 2 CFR section 200.303 et al. within Uniform Guidance. Per 2CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2CFR 200.213 Suspension and Debarment restricts awards, subawards, and contracts within certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2CFR 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM (System for Award Management) Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person Questioned Costs: N/A Context: Although the Town of Gypsum, Colorado, does not have policies or procedures in place to ensure that they do not contract with or make subawards to parties that are suspended or debarred, we did not identify any instances where Federal grant awards were paid to suspended or debarred vendors for 5 of 5 suspension and debarment transactions selected for testing. However, 2 of 5 did not hold an active registration with Sam.gov. Cause: Management was not aware of the requirements for determining suspension and debarment status under 2CFR section 180 within Uniform Guidance. G9 Finding #25-002 – Suspension and Debarment - continued Effect: The Town of Gypsum, Colorado, is at risk for noncompliance with Federal grants as it relates to suspension and debarment. Recommendation: We recommend that the Town of Gypsum, Colorado, implement policies and procedures to ensure that potential vendors are not suspended or debarred prior to contracting with them for goods and services. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will implement policies and procedures to ensure that potential vendors are not suspended or debarred prior to contracting with them for goods and services.