Audit 328203

Finding: Allowable Costs and Allowable Activities Federal Assistance Listing Number 84.425U – COVID-19 – Elementary and Secondary School Emergency Relief Fund (ESSER III) Department of Education, Passed-Through Colorado Department of Education Award Number – 4414/4431/9414; Award Year 2021 Criteria: According to 2 CFR Part 200.403 factors affecting allowability of costs – 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, (e) be determined in accordance with generally accepted accounting principles, (f) to 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 and (g) be adequately documented. In addition, according to 2 CFR Part 200.303, the 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. Condition: During our testing we noted the following: a. 3 out of the 25 payroll selections applied to the grant did not agree back to supporting payroll information. b. The indirect costs applied to the grant were not consistently applied between the quarters of the fiscal year due to variations in the indirect cost base used. Questioned Costs: a. $2,089. Questioned costs were determined by reviewing the payroll registers for the three impacted selections. b. None. The District under applied the amount of indirect costs allowable to the grant. Context: a. We tested 25 payroll, 25 nonpayroll and 25 fringe benefit transactions applied to the grant for the year ended June 30, 2024. The tested population covered expenditures of $7.1 million and the total population of expenditures were approximately $24.4 million. A non-statistical sampling methodology was used to select the sample. b. We tested the four quarters indirect costs calculations which were applied to the above grant award numbers for the year ended June 30, 2024. The tested population covered expenditures of $3.0 million and the total population of expenditures were approximately $3.1 million. A non-statistical sampling methodology was used to select the sample. Effect: The District did not have adequate internal controls in place over the ESSER grant which resulted in unallowable costs being applied to the grant and inconsistently applying indirect costs to the grant. Cause: The District continued to experience turnover within the positions overseeing grants during fiscal year 2024. There were not detailed reviews over the calculations and supporting documentation used to determine the expenditure amount to be applied to the grant. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that the District strengthen the internal controls surrounding review of all expenditures applied against federal grants including the supporting detail or calculations used to determine the expenditure amount to help ensure it recalculates and is consistent with District polices and procedures. Views of Responsible Officials: We agree with the finding. See separate report for planned corrective actions.

Finding: Special Tests – Wage Rate Requirements Federal Assistance Listing Number 84.425U – COVID-19 – Elementary and Secondary School Emergency Relief Fund (ESSER III) Department of Education, Passed-Through Colorado Department of Education Award Number – 4414/4431/9414; Award Year 2021 Criteria: According to 2 CFR Part 200.303 – The non-Federal entity must (a) 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. Condition: The District did not have controls in place to identify that certified payrolls were not obtained for all subcontractors for construction projects which occurred during fiscal year 2024. Questioned Costs: None. Upon additional audit follow up requests, the contractor confirmed no work was performed during these weeks by the subcontractor. Context: We tested two construction projects out of the four construction projects which occurred during the year ended June 30, 2024. The tested population covered expenditures of $3.6 million and the total population of expenditures were approximately $6.5 million. A non-statistical sampling methodology was used to select the sample. Effect: The District did not have adequate internal controls in place over to ensure that all certified payrolls were not obtained or reviewed for both the contractor and subcontractor so laborers and mechanics employed by contractors or subcontractors may not have been paid prevailing wage rates. Cause: The assigned employee to monitor, review and obtain certified payrolls during the year from contractors and subcontractors was out of the office for a portion of the year and the District did not have any employees trained as a backup. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the District implement additional internal controls over wage rate requirements, including cross-training employees to help ensure all certified payrolls or confirmation of no work performed are obtained timely. Views of Responsible Officials: Agree. See separate report for planned corrective actions.

Finding: Allowable Costs and Allowable Activities Federal Assistance Listing Number 84.425U – COVID-19 – Elementary and Secondary School Emergency Relief Fund (ESSER III) Department of Education, Passed-Through Colorado Department of Education Award Number – 4414/4431/9414; Award Year 2021 Criteria: According to 2 CFR Part 200.403 factors affecting allowability of costs – 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, (e) be determined in accordance with generally accepted accounting principles, (f) to 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 and (g) be adequately documented. In addition, according to 2 CFR Part 200.303, the 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. Condition: During our testing we noted the following: a. 3 out of the 25 payroll selections applied to the grant did not agree back to supporting payroll information. b. The indirect costs applied to the grant were not consistently applied between the quarters of the fiscal year due to variations in the indirect cost base used. Questioned Costs: a. $2,089. Questioned costs were determined by reviewing the payroll registers for the three impacted selections. b. None. The District under applied the amount of indirect costs allowable to the grant. Context: a. We tested 25 payroll, 25 nonpayroll and 25 fringe benefit transactions applied to the grant for the year ended June 30, 2024. The tested population covered expenditures of $7.1 million and the total population of expenditures were approximately $24.4 million. A non-statistical sampling methodology was used to select the sample. b. We tested the four quarters indirect costs calculations which were applied to the above grant award numbers for the year ended June 30, 2024. The tested population covered expenditures of $3.0 million and the total population of expenditures were approximately $3.1 million. A non-statistical sampling methodology was used to select the sample. Effect: The District did not have adequate internal controls in place over the ESSER grant which resulted in unallowable costs being applied to the grant and inconsistently applying indirect costs to the grant. Cause: The District continued to experience turnover within the positions overseeing grants during fiscal year 2024. There were not detailed reviews over the calculations and supporting documentation used to determine the expenditure amount to be applied to the grant. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that the District strengthen the internal controls surrounding review of all expenditures applied against federal grants including the supporting detail or calculations used to determine the expenditure amount to help ensure it recalculates and is consistent with District polices and procedures. Views of Responsible Officials: We agree with the finding. See separate report for planned corrective actions.

Finding: Special Tests – Wage Rate Requirements Federal Assistance Listing Number 84.425U – COVID-19 – Elementary and Secondary School Emergency Relief Fund (ESSER III) Department of Education, Passed-Through Colorado Department of Education Award Number – 4414/4431/9414; Award Year 2021 Criteria: According to 2 CFR Part 200.303 – The non-Federal entity must (a) 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. Condition: The District did not have controls in place to identify that certified payrolls were not obtained for all subcontractors for construction projects which occurred during fiscal year 2024. Questioned Costs: None. Upon additional audit follow up requests, the contractor confirmed no work was performed during these weeks by the subcontractor. Context: We tested two construction projects out of the four construction projects which occurred during the year ended June 30, 2024. The tested population covered expenditures of $3.6 million and the total population of expenditures were approximately $6.5 million. A non-statistical sampling methodology was used to select the sample. Effect: The District did not have adequate internal controls in place over to ensure that all certified payrolls were not obtained or reviewed for both the contractor and subcontractor so laborers and mechanics employed by contractors or subcontractors may not have been paid prevailing wage rates. Cause: The assigned employee to monitor, review and obtain certified payrolls during the year from contractors and subcontractors was out of the office for a portion of the year and the District did not have any employees trained as a backup. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the District implement additional internal controls over wage rate requirements, including cross-training employees to help ensure all certified payrolls or confirmation of no work performed are obtained timely. Views of Responsible Officials: Agree. See separate report for planned corrective actions.