Audit 318191

Compliance and Significant Deficiency in Internal Control over compliance with Activities Allowed or Unallowed, Allowable Cost/Cost Principles U.S. Department of Education Passed through NYS Department of Education Program Name: Education Stabilization Fund AL#: 84.425D Condition: Payroll and fringe benefits were charged to the ESSER 2 grant in excess of the amount allocable for services performed in the program. Criteria: As a recipient of federal awards, the District is required to establish and maintain effective internal controls over federal awards in accordance with 2CFR Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. Provisions included in section 200.403 – Factors Affecting Allowability of Costs states that costs must meet the following general criteria in order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.(f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. Context: Our audit of payroll service by individual employee charged to the ESSER 2 grant found that a journal entry had been made to equal the budgeted amount of payroll which was in excess of the actual expenditures. Questioned costs are $24,289 in direct payroll and $14,341 in related fringe benefits. Cause: The District did not have sufficient internal controls in place to ensure that the recorded amounts were adequately documented and reconciled by individual employees working in the program. Effect: The District is not in compliance with the requirements of the Education Stabilization Fund program with respect to Activities Allowed or Unallowed and Allowable Costs. Recommendation: We recommend that the District’s written procedures addressing internal controls with respect to program requirements be followed to ensure the District is in compliance at all times. View of Responsible Officials: Highland Falls-Fort Montgomery Central School District’s management concurs with this finding. The District is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 12 – 13.

Compliance and Significant Deficiency in Internal Control over compliance with Activities Allowed or Unallowed, Allowable Cost/Cost Principles U.S. Department of Education Passed through NYS Department of Education Program Name: Education Stabilization Fund AL#: 84.425U Condition: In accordance with C.R. 170.2 of the Commissioner’s Regulations, the District requires Purchase Orders to be established to encumber the approved budget items for each expenditure code. The complete bill packet including the Purchase Order, receiving slip, and invoice is submitted for authorization of payment. For the ARP Learning Loss Grant, Purchase Orders were created after the dates of service. Criteria: As a recipient of federal awards, the District is required to establish and maintain effective internal controls over federal awards in accordance with 2CFR Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. Provisions included in section 200.403 – Factors Affecting Allowability of Costs states that costs must meet the following general criteria in order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.(f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. Context: 4 items from a total population of 7 were selected for testing. A Purchase Order was initiated on 11//10/22 for an event that occurred on 8/31/22. Questioned Costs are $4,100. A purchase order dated 1/27/23 included an event that had occurred on 11/16/22. Questioned Costs are $1,750. Cause: The District did not have sufficient internal controls in place to ensure that Purchase Orders are created in accordance C.R. 170.2 of the Commissioner’s Regulations. When the invoices were received, a Purchase Order was required to be able to pay the vendor. Effect: The District is not in compliance with the requirements of the Education Stabilization Fund program with respect to Activities Allowed or Unallowed and Allowable Costs. Recommendation: We recommend that the District’s written procedures addressing internal controls with respect to program requirements be followed to ensure the District is in compliance at all times. View of Responsible Officials: Highland Falls-Fort Montgomery Central School District’s management concurs with this finding. The District is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 12 – 13.

Compliance and Significant Deficiency in Internal Control over compliance with Activities Allowed or Unallowed, Allowable Cost/Cost Principles U.S. Department of Education Passed through NYS Department of Education Program Name: Education Stabilization Fund AL#: 84.425U Condition: Payroll Costs for one employee were charged to the UPK grant in excess of the employee’s wages for the year. Criteria: 2CFR Section 200.430 requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must also (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. Context: Our review of the payroll in the UPK grant found that one employee had payroll recorded to the grant that exceed their full payroll for the year. The employee was docked pay that was incorrectly charged to the General Fund creating a negative earning in the general Fund. Questioned Costs are $736. Cause: The employee was docked pay that was incorrectly charged to the General Fund creating a negative earning in the General Fund and an overstatement in the UPK Grant. Questioned Costs are $736. Effect: The District is not in compliance with the requirements of the Education Stabilization Fund program with respect to Activities Allowed or Unallowed and Allowable Costs. Recommendation: We recommend that the District’s written procedures addressing internal controls with respect to program requirements be followed to ensure the District is in compliance at all times. View of Responsible Officials: Highland Falls-Fort Montgomery Central School District’s management concurs with this finding. The District is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 12 – 13.

Compliance and Significant Deficiency in Internal Control over compliance with Activities Allowed or Unallowed, Allowable Cost/Cost Principles U.S. Department of Education Passed through NYS Department of Education Program Name: Education Stabilization Fund AL#: 84.425D Condition: Payroll and fringe benefits were charged to the ESSER 2 grant in excess of the amount allocable for services performed in the program. Criteria: As a recipient of federal awards, the District is required to establish and maintain effective internal controls over federal awards in accordance with 2CFR Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. Provisions included in section 200.403 – Factors Affecting Allowability of Costs states that costs must meet the following general criteria in order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.(f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. Context: Our audit of payroll service by individual employee charged to the ESSER 2 grant found that a journal entry had been made to equal the budgeted amount of payroll which was in excess of the actual expenditures. Questioned costs are $24,289 in direct payroll and $14,341 in related fringe benefits. Cause: The District did not have sufficient internal controls in place to ensure that the recorded amounts were adequately documented and reconciled by individual employees working in the program. Effect: The District is not in compliance with the requirements of the Education Stabilization Fund program with respect to Activities Allowed or Unallowed and Allowable Costs. Recommendation: We recommend that the District’s written procedures addressing internal controls with respect to program requirements be followed to ensure the District is in compliance at all times. View of Responsible Officials: Highland Falls-Fort Montgomery Central School District’s management concurs with this finding. The District is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 12 – 13.

Compliance and Significant Deficiency in Internal Control over compliance with Activities Allowed or Unallowed, Allowable Cost/Cost Principles U.S. Department of Education Passed through NYS Department of Education Program Name: Education Stabilization Fund AL#: 84.425U Condition: In accordance with C.R. 170.2 of the Commissioner’s Regulations, the District requires Purchase Orders to be established to encumber the approved budget items for each expenditure code. The complete bill packet including the Purchase Order, receiving slip, and invoice is submitted for authorization of payment. For the ARP Learning Loss Grant, Purchase Orders were created after the dates of service. Criteria: As a recipient of federal awards, the District is required to establish and maintain effective internal controls over federal awards in accordance with 2CFR Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. Provisions included in section 200.403 – Factors Affecting Allowability of Costs states that costs must meet the following general criteria in order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.(f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. Context: 4 items from a total population of 7 were selected for testing. A Purchase Order was initiated on 11//10/22 for an event that occurred on 8/31/22. Questioned Costs are $4,100. A purchase order dated 1/27/23 included an event that had occurred on 11/16/22. Questioned Costs are $1,750. Cause: The District did not have sufficient internal controls in place to ensure that Purchase Orders are created in accordance C.R. 170.2 of the Commissioner’s Regulations. When the invoices were received, a Purchase Order was required to be able to pay the vendor. Effect: The District is not in compliance with the requirements of the Education Stabilization Fund program with respect to Activities Allowed or Unallowed and Allowable Costs. Recommendation: We recommend that the District’s written procedures addressing internal controls with respect to program requirements be followed to ensure the District is in compliance at all times. View of Responsible Officials: Highland Falls-Fort Montgomery Central School District’s management concurs with this finding. The District is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 12 – 13.

Compliance and Significant Deficiency in Internal Control over compliance with Activities Allowed or Unallowed, Allowable Cost/Cost Principles U.S. Department of Education Passed through NYS Department of Education Program Name: Education Stabilization Fund AL#: 84.425U Condition: Payroll Costs for one employee were charged to the UPK grant in excess of the employee’s wages for the year. Criteria: 2CFR Section 200.430 requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must also (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. Context: Our review of the payroll in the UPK grant found that one employee had payroll recorded to the grant that exceed their full payroll for the year. The employee was docked pay that was incorrectly charged to the General Fund creating a negative earning in the general Fund. Questioned Costs are $736. Cause: The employee was docked pay that was incorrectly charged to the General Fund creating a negative earning in the General Fund and an overstatement in the UPK Grant. Questioned Costs are $736. Effect: The District is not in compliance with the requirements of the Education Stabilization Fund program with respect to Activities Allowed or Unallowed and Allowable Costs. Recommendation: We recommend that the District’s written procedures addressing internal controls with respect to program requirements be followed to ensure the District is in compliance at all times. View of Responsible Officials: Highland Falls-Fort Montgomery Central School District’s management concurs with this finding. The District is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 12 – 13.