Material Weakness:2022-001 - Establishment of procedures to provide for timely reconciliation, close-out, and reporting of financial activity Criteria: The District should have internal control policies and procedures surrounding the administration and monitoring of financial activity of the District on a routine, timely basis. Properly designed and implemented internal controls should ensure that account balances (cash, withholdings, other) and activity associated with revolving accounts are formally reconciled and monitored on a routine basis. Condition:The District did not perform timely reconciliation and close-out of fiscal activity throughout fiscal year 2022. It should be noted the District did not close-out financial records for the fiscal year end June 30, 2022, until May 2023. During the fiscal year certain financial aid was also withheld from the Commonwealth pending additional reporting submissions. Additionally, as we have recommended in prior years, procedures surrounding the reconciliation of withholding accounts and disposition of identified variances has not yet been fully implemented. Potential Effect: Lack of timely reconciliations, reporting and monitoring of financial activity presents the reasonable possibility that material misstatements of the District’s financial activity (error or otherwise) will not be prevented or detected and corrected in a timely manner. Cause: Based upon our discussion with District personnel, due in part to the pandemic, turnover in certain key positions (District accountant) and other personnel changes, the District has fallen behind in the overall close-out and timely reconciliation of financial activity. Additionally, it was indicated additional complexities associated with ever changing operating and regulatory environment of the District combined with staffing turnover increased delays in overall completion of work. Auditor’s recommendation: It is important for management and those charged with governance to design and implement internal controls surrounding financial reporting which ensure timely reconciliation, reporting, monitoring of financial activity. An effectively designed, implemented, and maintained internal control system (no matter the size of the organization) addresses certain key areas such as (a) reliability of the organization’s financial reporting, (b) the effectiveness and efficiency of its operations, and (c) its compliance with applicable laws and regulations. Considerations in evaluating the design and operations of internal control should be evaluated within the basic five components summarized as follows: control environment (tone of the organization/structure); risk assessment (identification, analysis and management of risks affecting financial reporting); information systems (procedures and records established to initiate, authorize, record and process transactions; resolve incorrect processing; account for overrides of systems or bypassing controls; ensure information is accumulated, recorded, processed, summarized, reported and maintained); control activities ( policies and procedures that assist in ensuring management directives are carried out); and monitoring (accessing the quality of internal control over time). In addition to adequacy of staffing levels. Additionally, cross-training of personnel can provide additional benefits in times of staffing turnovers. It is important that all risk assessments include formal documentation of evaluations and decisions made. Moreover, expected timelines, and reporting methodologies should be established which provide reasonable monitoring activities, which allow for prevention, detection and correction of errors and misstatements in a timely manner. It is important to note that current accounting and auditing standards continue to emphasis and require additional and more comprehensive and in-depth participation by the governing body in regard to the overall risk assessment and monitoring of financial activities of the organization.
Other Matters:2022-002 Completion and filing of the Single Audit in accordance with OMB guidelines. Criteria: OMB guidelines generally requires the District’s Single Audit to be completed and filed by March 31 of the following year (March 31, 2023). Condition:The District was unable to meet the filing deadline in the current year. Cause: The District was not closed out and timely with the audit. Effect: The District’s filing is considered late by OMB. Auditor’s Recommendation: We recommend the District work to meet the required filing deadline.
Significant Deficiency:2022-003 Recommend continued enhancement/monitoring of established policies and procedures surrounding grant compliance Criteria: Current Uniform Guidance highlights the importance and requirement for grantees to maintain internal control policies and procedures Surrounding the administration of federal grants, focusing clearly on internal controls over compliance with federal requirements for each major program. Condition: As noted in the prior year audit, the District has yet to fully update and review established policies and procedures surrounding risk assessments and grants management associated with the direct administration of federal grants (and others), focusing on clearly defining the key components (i.e., control environment, risk assessment, control activities, information and communication, monitoring). During the current year, we noted the following: Semi-annual time and effort certifications were all completed at the end of the fiscal year same as prior year). We noted a drawdown request associated with the ESSER III funds was performed in January of 2022; however, no expenditures were charged to the funds until August of the subsequent year (fiscal year 2023). We noted the documentation related to quotes obtained under District and state procurement guidelines were unclear/incomplete. See also the Financial Statement Finding 2022-001 reported in accordance with Government Auditing Standards. In our opinion this deficiency could have an impact upon the District’s major federal programs. Repeat Finding: This is a repeat finding from the prior year. Cause: Based upon our discussion with District personnel, due in part to the pandemic, turnover in certain key positions (District accountant) and other personnel changes, the District has fallen behind in the overall close-out and timely reconciliation of financial activity. Additionally, it was indicated additional complexities associated with ever changing operating and regulatory environment of the District combined with staffing turnover increased delays in overall completion of work. A review of the current grant manual, policies and procedures has not been updated. Potential Effect: Specific grant compliance requirements may not be complied with. Moreover, errors or fraud may occur which may not be prevented or detected in a timely manner. Auditor’s recommendation: In our profession opinion, as recommend in the previous year, it is important the District evaluate enhancements to address timely updating of established procedures to ensure the District’s compliance with grant and financial reporting requirements. This is additionally important with changes in District personnel. Management and those charged with governance to design and implement internal controls surrounding financial reporting which ensure timely reconciliation, reporting, monitoring of financial activity and grant compliance. Such policies and procedures should include centralized reporting and monitoring of grant requirements and compliance related thereto should be incorporated into established organizational internal control policies and procedures (inclusive of risk assessment). A routine assessment (annually) should be performed in accordance with updated grant and OMB guidance, to ensure the appropriate design and implementation related thereto. See also our recommendation above (2022-001).
Material Weakness:2022-001 - Establishment of procedures to provide for timely reconciliation, close-out, and reporting of financial activity Criteria: The District should have internal control policies and procedures surrounding the administration and monitoring of financial activity of the District on a routine, timely basis. Properly designed and implemented internal controls should ensure that account balances (cash, withholdings, other) and activity associated with revolving accounts are formally reconciled and monitored on a routine basis. Condition:The District did not perform timely reconciliation and close-out of fiscal activity throughout fiscal year 2022. It should be noted the District did not close-out financial records for the fiscal year end June 30, 2022, until May 2023. During the fiscal year certain financial aid was also withheld from the Commonwealth pending additional reporting submissions. Additionally, as we have recommended in prior years, procedures surrounding the reconciliation of withholding accounts and disposition of identified variances has not yet been fully implemented. Potential Effect: Lack of timely reconciliations, reporting and monitoring of financial activity presents the reasonable possibility that material misstatements of the District’s financial activity (error or otherwise) will not be prevented or detected and corrected in a timely manner. Cause: Based upon our discussion with District personnel, due in part to the pandemic, turnover in certain key positions (District accountant) and other personnel changes, the District has fallen behind in the overall close-out and timely reconciliation of financial activity. Additionally, it was indicated additional complexities associated with ever changing operating and regulatory environment of the District combined with staffing turnover increased delays in overall completion of work. Auditor’s recommendation: It is important for management and those charged with governance to design and implement internal controls surrounding financial reporting which ensure timely reconciliation, reporting, monitoring of financial activity. An effectively designed, implemented, and maintained internal control system (no matter the size of the organization) addresses certain key areas such as (a) reliability of the organization’s financial reporting, (b) the effectiveness and efficiency of its operations, and (c) its compliance with applicable laws and regulations. Considerations in evaluating the design and operations of internal control should be evaluated within the basic five components summarized as follows: control environment (tone of the organization/structure); risk assessment (identification, analysis and management of risks affecting financial reporting); information systems (procedures and records established to initiate, authorize, record and process transactions; resolve incorrect processing; account for overrides of systems or bypassing controls; ensure information is accumulated, recorded, processed, summarized, reported and maintained); control activities ( policies and procedures that assist in ensuring management directives are carried out); and monitoring (accessing the quality of internal control over time). In addition to adequacy of staffing levels. Additionally, cross-training of personnel can provide additional benefits in times of staffing turnovers. It is important that all risk assessments include formal documentation of evaluations and decisions made. Moreover, expected timelines, and reporting methodologies should be established which provide reasonable monitoring activities, which allow for prevention, detection and correction of errors and misstatements in a timely manner. It is important to note that current accounting and auditing standards continue to emphasis and require additional and more comprehensive and in-depth participation by the governing body in regard to the overall risk assessment and monitoring of financial activities of the organization.
Other Matters:2022-002 Completion and filing of the Single Audit in accordance with OMB guidelines. Criteria: OMB guidelines generally requires the District’s Single Audit to be completed and filed by March 31 of the following year (March 31, 2023). Condition:The District was unable to meet the filing deadline in the current year. Cause: The District was not closed out and timely with the audit. Effect: The District’s filing is considered late by OMB. Auditor’s Recommendation: We recommend the District work to meet the required filing deadline.
Significant Deficiency:2022-003 Recommend continued enhancement/monitoring of established policies and procedures surrounding grant compliance Criteria: Current Uniform Guidance highlights the importance and requirement for grantees to maintain internal control policies and procedures Surrounding the administration of federal grants, focusing clearly on internal controls over compliance with federal requirements for each major program. Condition: As noted in the prior year audit, the District has yet to fully update and review established policies and procedures surrounding risk assessments and grants management associated with the direct administration of federal grants (and others), focusing on clearly defining the key components (i.e., control environment, risk assessment, control activities, information and communication, monitoring). During the current year, we noted the following: Semi-annual time and effort certifications were all completed at the end of the fiscal year same as prior year). We noted a drawdown request associated with the ESSER III funds was performed in January of 2022; however, no expenditures were charged to the funds until August of the subsequent year (fiscal year 2023). We noted the documentation related to quotes obtained under District and state procurement guidelines were unclear/incomplete. See also the Financial Statement Finding 2022-001 reported in accordance with Government Auditing Standards. In our opinion this deficiency could have an impact upon the District’s major federal programs. Repeat Finding: This is a repeat finding from the prior year. Cause: Based upon our discussion with District personnel, due in part to the pandemic, turnover in certain key positions (District accountant) and other personnel changes, the District has fallen behind in the overall close-out and timely reconciliation of financial activity. Additionally, it was indicated additional complexities associated with ever changing operating and regulatory environment of the District combined with staffing turnover increased delays in overall completion of work. A review of the current grant manual, policies and procedures has not been updated. Potential Effect: Specific grant compliance requirements may not be complied with. Moreover, errors or fraud may occur which may not be prevented or detected in a timely manner. Auditor’s recommendation: In our profession opinion, as recommend in the previous year, it is important the District evaluate enhancements to address timely updating of established procedures to ensure the District’s compliance with grant and financial reporting requirements. This is additionally important with changes in District personnel. Management and those charged with governance to design and implement internal controls surrounding financial reporting which ensure timely reconciliation, reporting, monitoring of financial activity and grant compliance. Such policies and procedures should include centralized reporting and monitoring of grant requirements and compliance related thereto should be incorporated into established organizational internal control policies and procedures (inclusive of risk assessment). A routine assessment (annually) should be performed in accordance with updated grant and OMB guidance, to ensure the appropriate design and implementation related thereto. See also our recommendation above (2022-001).