Audit 301207

Finding Number: 2023‐001 Repeat Finding: Yes, 2022‐001 Program Name/Assistance Listing Title: Indian School Equalization Assistance Listing Number: 15.042 Federal Agency: U.S. Department of the Interior Federal Award Number: A22AV00856 Pass‐Through Agency: Bureau of Indian Affairs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement, Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Condition Adequate internal controls over its procurement procedures to ensure compliance with federal regulations and guidelines and School policies were not in place. The School did not establish complete written procurement standards. In addition, the School did not follow federal guidelines for purchases exceeding the small purchases threshold. Cause The School’s internal controls over procurement of goods and services were not adequate. Effect The School was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of purchasing, we noted the following: - Sealed bids were not performed in accordance with School policies. However, these purchases did not rise above the Simplified Acquisition Threshold. - For eight of 10 vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. - The School's policy did not include any language regarding quotes and thresholds. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2023‐003 Repeat Finding: Yes, 2022‐003 Program Name/Assistance Listing Title: Indian School Equalization Assistance Listing Number: 15.042 Federal Agency: U.S. Department of the Interior Federal Award Number: A22AV00856 Pass‐Through Agency: Bureau of Indian Affairs Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Criteria The School is required to file the Federal Financial Report, SF‐425 to report program outlays and program income as prescribed by the Federal Awarding Agency. Condition Financial reporting obligations were not met during the year. Cause Adequate review systems were not in place for management to monitor compliance with these requirements and agree amounts reported to the general ledger. Effect The School was not always in compliance with federal regulations and guidelines. Context During our review of the School's SF‐425 reports, we noted the following: - The first quarter SF‐425 report included cash receipts and disbursements from July 1, 2022, through October 22, 2022, as opposed to July 1, 2022, through September 30, 2022. - The second quarter SF‐425 report included cash receipts and disbursements from July 1, 2022, through January 27, 2023, as opposed to July 1, 2022, through December 31, 2022. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should implement review procedures to ensure the information reported on the Federal Financial Report, SF‐425, is accurate and appropriate. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2023‐002 Repeat Finding: Yes, 2022‐002 Program Name/Assistance Listing Title: COVID‐19 Education Stabilization Fund Assistance Listing Number: 84.425U Federal Agency: U.S. Department of Education Federal Award Number: A19AV00937 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Special Tests and Provisions Criteria All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC §§3141‐3144, 3146, and 3147). Condition The School did not determine whether laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds were paid equal to or in excess of the prevailing wage rate for the locality. Cause The School was unaware that a project completed during the year was subject to prevailing wage rate requirements. Effect The School could not demonstrate that prevailing wage rates were paid on all applicable projects during the year. Context For three projects funded by the federal grant, the School did not include required prevailing wage rate clauses in the contract or subcontract and did not obtain copies of certified payroll for each week work was performed. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should review all federally‐funded projects and determine which are subject to prevailing wage rate requirements. When applicable, the School should obtain certified payrolls from contractors and subcontractors to determine that prevailing wage rate requirements are met. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2023‐004 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Education Stabilization Fund Assistance Listing Number: 84.425U Federal Agency: U.S. Department of Education Federal Award Number: A19AV00937 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Reporting Criteria The School is required to file Form 941, Employer’s Quarterly Federal Tax Returns, to report taxable wages as prescribed by the Internal Revenue Service. Further, School management is responsible for establishing and maintaining internal controls over payroll to ensure that all payroll disbursements are properly processed and recorded in accordance with the Fair Labor Standards Act (FLSA) and Internal Revenue Service (IRS) regulations. Condition The School did not have adequate internal controls over payroll processing and reporting. Cause The School’s internal controls over Form 941 reporting and payroll processing were not adequately established and implemented. Effect Reported taxable wages on the School’s fiscal year 2022‐23 Form 941 were understated. The School was not in compliance with Federal regulations and guidelines related to payroll. Context During our review of the School's Form 941 filed quarterly and the general ledger, it was determined that the School had under‐reported approximately $170,000 of taxable wages ($116,900 paid from the federal grant). In addition, for one of 40 employees reviewed, the employee was not paid for one hour of overtime. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should report all stipends paid on its Form 941. In addition, the School should process payroll withholdings/deductions properly from all wages, including stipends. Finally, the School should ensure that employees are paid for all time worked. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2023‐001 Repeat Finding: Yes, 2022‐001 Program Name/Assistance Listing Title: Indian School Equalization Assistance Listing Number: 15.042 Federal Agency: U.S. Department of the Interior Federal Award Number: A22AV00856 Pass‐Through Agency: Bureau of Indian Affairs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement, Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Condition Adequate internal controls over its procurement procedures to ensure compliance with federal regulations and guidelines and School policies were not in place. The School did not establish complete written procurement standards. In addition, the School did not follow federal guidelines for purchases exceeding the small purchases threshold. Cause The School’s internal controls over procurement of goods and services were not adequate. Effect The School was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of purchasing, we noted the following: - Sealed bids were not performed in accordance with School policies. However, these purchases did not rise above the Simplified Acquisition Threshold. - For eight of 10 vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. - The School's policy did not include any language regarding quotes and thresholds. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2023‐003 Repeat Finding: Yes, 2022‐003 Program Name/Assistance Listing Title: Indian School Equalization Assistance Listing Number: 15.042 Federal Agency: U.S. Department of the Interior Federal Award Number: A22AV00856 Pass‐Through Agency: Bureau of Indian Affairs Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Criteria The School is required to file the Federal Financial Report, SF‐425 to report program outlays and program income as prescribed by the Federal Awarding Agency. Condition Financial reporting obligations were not met during the year. Cause Adequate review systems were not in place for management to monitor compliance with these requirements and agree amounts reported to the general ledger. Effect The School was not always in compliance with federal regulations and guidelines. Context During our review of the School's SF‐425 reports, we noted the following: - The first quarter SF‐425 report included cash receipts and disbursements from July 1, 2022, through October 22, 2022, as opposed to July 1, 2022, through September 30, 2022. - The second quarter SF‐425 report included cash receipts and disbursements from July 1, 2022, through January 27, 2023, as opposed to July 1, 2022, through December 31, 2022. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should implement review procedures to ensure the information reported on the Federal Financial Report, SF‐425, is accurate and appropriate. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2023‐002 Repeat Finding: Yes, 2022‐002 Program Name/Assistance Listing Title: COVID‐19 Education Stabilization Fund Assistance Listing Number: 84.425U Federal Agency: U.S. Department of Education Federal Award Number: A19AV00937 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Special Tests and Provisions Criteria All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC §§3141‐3144, 3146, and 3147). Condition The School did not determine whether laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds were paid equal to or in excess of the prevailing wage rate for the locality. Cause The School was unaware that a project completed during the year was subject to prevailing wage rate requirements. Effect The School could not demonstrate that prevailing wage rates were paid on all applicable projects during the year. Context For three projects funded by the federal grant, the School did not include required prevailing wage rate clauses in the contract or subcontract and did not obtain copies of certified payroll for each week work was performed. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should review all federally‐funded projects and determine which are subject to prevailing wage rate requirements. When applicable, the School should obtain certified payrolls from contractors and subcontractors to determine that prevailing wage rate requirements are met. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2023‐004 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Education Stabilization Fund Assistance Listing Number: 84.425U Federal Agency: U.S. Department of Education Federal Award Number: A19AV00937 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Reporting Criteria The School is required to file Form 941, Employer’s Quarterly Federal Tax Returns, to report taxable wages as prescribed by the Internal Revenue Service. Further, School management is responsible for establishing and maintaining internal controls over payroll to ensure that all payroll disbursements are properly processed and recorded in accordance with the Fair Labor Standards Act (FLSA) and Internal Revenue Service (IRS) regulations. Condition The School did not have adequate internal controls over payroll processing and reporting. Cause The School’s internal controls over Form 941 reporting and payroll processing were not adequately established and implemented. Effect Reported taxable wages on the School’s fiscal year 2022‐23 Form 941 were understated. The School was not in compliance with Federal regulations and guidelines related to payroll. Context During our review of the School's Form 941 filed quarterly and the general ledger, it was determined that the School had under‐reported approximately $170,000 of taxable wages ($116,900 paid from the federal grant). In addition, for one of 40 employees reviewed, the employee was not paid for one hour of overtime. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should report all stipends paid on its Form 941. In addition, the School should process payroll withholdings/deductions properly from all wages, including stipends. Finally, the School should ensure that employees are paid for all time worked. Views of Responsible Officials See Corrective Action Plan.