Audit 340240

Finding #2024-003; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Allowable costs under Federal awards are to be determined in accordance with generally accepted accounting principles (GAAP). CAUSE: The cause was a misunderstanding of the term “encumbrance” by management. Instead of relying on purchase orders (POs) to encumber grant funds, checks were issued for expenditures that were not invoiced or incurred until after year end. EFFECT: This deficiency resulted in otherwise allowable ESSER expenditures to be erroneously recognized in 2023-24 instead of 2024-25. (Also see Finding #2024-001 under Section II.) QUESTIONED COSTS: $40,555 PROPER PERSPECTIVE (SAMPLING): A sample of sixty (60) totaling $923,850 (44.6% of population) was selected for testing of non-payroll related expenditures during the financial statement audit. Included in the sample were twenty-one (21) federal grant expenditures ($631,176, or 68.3% of sample). Of those, four (4) were ESSER costs of $40,555 (4.4% of sample) attributable to fiscal year 2024-25, not 2023-24. The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend the business office obtain a better understanding of encumbrances, especially with regard to grant programs, and that expenditures are recorded only for items or services received to ensure inclusion in the correct fiscal year. MANAGEMENT RESPONSE: Management agrees with the recommendations and will obtain a better understanding of encumbrances, especially with regard to grant programs, and will record expenditures only for items or services received.

Finding #2024-003; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Allowable costs under Federal awards are to be determined in accordance with generally accepted accounting principles (GAAP). CAUSE: The cause was a misunderstanding of the term “encumbrance” by management. Instead of relying on purchase orders (POs) to encumber grant funds, checks were issued for expenditures that were not invoiced or incurred until after year end. EFFECT: This deficiency resulted in otherwise allowable ESSER expenditures to be erroneously recognized in 2023-24 instead of 2024-25. (Also see Finding #2024-001 under Section II.) QUESTIONED COSTS: $40,555 PROPER PERSPECTIVE (SAMPLING): A sample of sixty (60) totaling $923,850 (44.6% of population) was selected for testing of non-payroll related expenditures during the financial statement audit. Included in the sample were twenty-one (21) federal grant expenditures ($631,176, or 68.3% of sample). Of those, four (4) were ESSER costs of $40,555 (4.4% of sample) attributable to fiscal year 2024-25, not 2023-24. The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend the business office obtain a better understanding of encumbrances, especially with regard to grant programs, and that expenditures are recorded only for items or services received to ensure inclusion in the correct fiscal year. MANAGEMENT RESPONSE: Management agrees with the recommendations and will obtain a better understanding of encumbrances, especially with regard to grant programs, and will record expenditures only for items or services received.

Finding #2024-003; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Allowable costs under Federal awards are to be determined in accordance with generally accepted accounting principles (GAAP). CAUSE: The cause was a misunderstanding of the term “encumbrance” by management. Instead of relying on purchase orders (POs) to encumber grant funds, checks were issued for expenditures that were not invoiced or incurred until after year end. EFFECT: This deficiency resulted in otherwise allowable ESSER expenditures to be erroneously recognized in 2023-24 instead of 2024-25. (Also see Finding #2024-001 under Section II.) QUESTIONED COSTS: $40,555 PROPER PERSPECTIVE (SAMPLING): A sample of sixty (60) totaling $923,850 (44.6% of population) was selected for testing of non-payroll related expenditures during the financial statement audit. Included in the sample were twenty-one (21) federal grant expenditures ($631,176, or 68.3% of sample). Of those, four (4) were ESSER costs of $40,555 (4.4% of sample) attributable to fiscal year 2024-25, not 2023-24. The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend the business office obtain a better understanding of encumbrances, especially with regard to grant programs, and that expenditures are recorded only for items or services received to ensure inclusion in the correct fiscal year. MANAGEMENT RESPONSE: Management agrees with the recommendations and will obtain a better understanding of encumbrances, especially with regard to grant programs, and will record expenditures only for items or services received.

Finding #2024-004; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Cost Principles require that allowable costs under Federal awards be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. With regard to obtaining bids or quotes for goods/supplies and services, both the Federal government and Pennsylvania establish thresholds for obtaining bids and quotes, with the most restrictive taking precedence. In addition, the District’s own policies require obtaining bids and price quotations for products and services where such bids or quotations are required by law. CAUSE: The cause was a misunderstanding by management of the requirement to utilize the more restrictive Pennsylvania imposed thresholds for the ESSER purchases in question, despite the higher thresholds under Uniform Guidance. Accordingly, the District obtained quotes for two (2) equipment purchases and one (1) service that required bids. EFFECT: The failure to obtain bids for the items purchased and service performed led to the District’s failure to comply with the Cost Principles contained in the Uniform Administrative Requirements. QUESTIONED COSTS: $63,147 PROPER PERSPECTIVE (SAMPLING): A sample of nine (9) totaling $596,207 (94.1% of population) was selected for testing of non-payroll related ESSER expenditures. Of those, required bids were not obtained for two (2) purchases of equipment and one (1) service performed (10.6% of sample). The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend that all personnel involved in purchasing, especially those in the business office, obtain a better understanding of the procurement thresholds established by both federal and state agencies, ensuring that bids or quotes are obtained, as necessary. Pennsylvania publishes an annual bulletin containing a chart for the various thresholds. This chart could be utilized as an easy reference. MANAGEMENT RESPONSE: Management agrees with the recommendation, and personnel involved in purchasing, especially those in the business office, will obtain a better understanding of the federal and state procurement thresholds, ensuring that bids or quotes will be obtained, as necessary. The Pennsylvania bulletin has been provided by the auditor, and we will use that as a reference, in addition to the District’s own policy.

Finding #2024-004; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Cost Principles require that allowable costs under Federal awards be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. With regard to obtaining bids or quotes for goods/supplies and services, both the Federal government and Pennsylvania establish thresholds for obtaining bids and quotes, with the most restrictive taking precedence. In addition, the District’s own policies require obtaining bids and price quotations for products and services where such bids or quotations are required by law. CAUSE: The cause was a misunderstanding by management of the requirement to utilize the more restrictive Pennsylvania imposed thresholds for the ESSER purchases in question, despite the higher thresholds under Uniform Guidance. Accordingly, the District obtained quotes for two (2) equipment purchases and one (1) service that required bids. EFFECT: The failure to obtain bids for the items purchased and service performed led to the District’s failure to comply with the Cost Principles contained in the Uniform Administrative Requirements. QUESTIONED COSTS: $63,147 PROPER PERSPECTIVE (SAMPLING): A sample of nine (9) totaling $596,207 (94.1% of population) was selected for testing of non-payroll related ESSER expenditures. Of those, required bids were not obtained for two (2) purchases of equipment and one (1) service performed (10.6% of sample). The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend that all personnel involved in purchasing, especially those in the business office, obtain a better understanding of the procurement thresholds established by both federal and state agencies, ensuring that bids or quotes are obtained, as necessary. Pennsylvania publishes an annual bulletin containing a chart for the various thresholds. This chart could be utilized as an easy reference. MANAGEMENT RESPONSE: Management agrees with the recommendation, and personnel involved in purchasing, especially those in the business office, will obtain a better understanding of the federal and state procurement thresholds, ensuring that bids or quotes will be obtained, as necessary. The Pennsylvania bulletin has been provided by the auditor, and we will use that as a reference, in addition to the District’s own policy.

Finding #2024-004; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Cost Principles require that allowable costs under Federal awards be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. With regard to obtaining bids or quotes for goods/supplies and services, both the Federal government and Pennsylvania establish thresholds for obtaining bids and quotes, with the most restrictive taking precedence. In addition, the District’s own policies require obtaining bids and price quotations for products and services where such bids or quotations are required by law. CAUSE: The cause was a misunderstanding by management of the requirement to utilize the more restrictive Pennsylvania imposed thresholds for the ESSER purchases in question, despite the higher thresholds under Uniform Guidance. Accordingly, the District obtained quotes for two (2) equipment purchases and one (1) service that required bids. EFFECT: The failure to obtain bids for the items purchased and service performed led to the District’s failure to comply with the Cost Principles contained in the Uniform Administrative Requirements. QUESTIONED COSTS: $63,147 PROPER PERSPECTIVE (SAMPLING): A sample of nine (9) totaling $596,207 (94.1% of population) was selected for testing of non-payroll related ESSER expenditures. Of those, required bids were not obtained for two (2) purchases of equipment and one (1) service performed (10.6% of sample). The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend that all personnel involved in purchasing, especially those in the business office, obtain a better understanding of the procurement thresholds established by both federal and state agencies, ensuring that bids or quotes are obtained, as necessary. Pennsylvania publishes an annual bulletin containing a chart for the various thresholds. This chart could be utilized as an easy reference. MANAGEMENT RESPONSE: Management agrees with the recommendation, and personnel involved in purchasing, especially those in the business office, will obtain a better understanding of the federal and state procurement thresholds, ensuring that bids or quotes will be obtained, as necessary. The Pennsylvania bulletin has been provided by the auditor, and we will use that as a reference, in addition to the District’s own policy.

Finding #2024-005; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: Management failed to meet the Pennsylvania Department of Education (PDE) deadlines for submission of the quarterly reports (“Reconciliation of Cash on Hand”) for its grants, including the ECIA Title programs and the Education Stabilization (ESSER/ARP) funding during the 2023-24 fiscal year. In addition, as of June 30, 2024, several Final Expenditure Reports (FERs) also remain due. CRITERIA: According to PDE reporting instructions, a “Required Report” represents a required filing for projects that received payments in a previous quarter. The report must be filed no later than the 10th working day following the quarter just ended. A “Delinquent Report” represents a required report that has not been submitted by the 10th working day of the month. Consequently, delinquent reports are not available for importation by the Comptroller’s Office. As such, all scheduled payments to the respective project are suspended until the report is sent. Delinquent reports must be filed no later than the 10th working day of the following month. There are circumstances where the Final Expenditure Report will supersede the Quarterly Report. CAUSE: The cause of the non-filing is due to multiple issues. First, the addition of COVID-19 related funding added to the business manager’s workload. Second, due to the size of the District, the business manager not only performs duties associated with his own position, but also assists with other administrative duties. Third, there was a staff retirement in the business office, and the new employee hired in August 2023 has not yet been introduced to grant reporting. As mentioned in Finding #2024-002, the business manager is involved with nearly all transactions involving the business office. The business manager’s current workload, the additional COVID-19 funding, and the staff retirement caused other tasks to take priority over monitoring of grant expenditures and thus, led to the failure to file the required grant reports. EFFECT: The effect of the failure to file such reports caused the District to be out of compliance with PDE requirements. The noncompliance resulted in delayed funding from PDE under the ECIA Title and ESSER programs during the 2023-24 school year. PDE could further suspend funding on future grants, which would negatively impact the District’s cash flows. QUESTIONED COSTS: $0 PROPER PERSPECTIVE (SAMPLING): Because there were no quarterly reports filed in 2023-24, 0% of the reports were sampled. The audit sample was statistically valid. REPEAT FINDING: Yes. RECOMMENDATION: We recommend that the entire management team (superintendent, business manager, building principals, maintenance supervisor, etc.) identify and prioritize the duties each performs and determine those that can be reassigned to support staff, as well as whether the appropriate administrator is actually responsible for the duties they are performing. The business manager’s duties, as much as possible, should be limited to those directly involving the business office. With all administrative positions filled, duties that had shifted to the business manager should be able to revert to the appropriate individual. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current so that suspended grant payments resume. MANAGEMENT RESPONSE: Management agrees with the recommendations. The unique situation with the COVID-19 funding, coupled with shifts in the business manager’s duties over the last few years and the staff retirement has resulted in grant report filings becoming a lower priority. The management team will work together and will resume management team meetings to determine and monitor the duties for which each is responsible. Strides have been made in this regard, as the principals have become involved in Federal program training, budgeting, and scheduling. Although the aforementioned report submissions are delinquent and funding was suspended, some filings have been completed, and certain payments are forthcoming. However, management will begin to gradually involve the new business office employee in grant reporting to improve on grant compliance with reporting requirements.

Finding #2024-005; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: Management failed to meet the Pennsylvania Department of Education (PDE) deadlines for submission of the quarterly reports (“Reconciliation of Cash on Hand”) for its grants, including the ECIA Title programs and the Education Stabilization (ESSER/ARP) funding during the 2023-24 fiscal year. In addition, as of June 30, 2024, several Final Expenditure Reports (FERs) also remain due. CRITERIA: According to PDE reporting instructions, a “Required Report” represents a required filing for projects that received payments in a previous quarter. The report must be filed no later than the 10th working day following the quarter just ended. A “Delinquent Report” represents a required report that has not been submitted by the 10th working day of the month. Consequently, delinquent reports are not available for importation by the Comptroller’s Office. As such, all scheduled payments to the respective project are suspended until the report is sent. Delinquent reports must be filed no later than the 10th working day of the following month. There are circumstances where the Final Expenditure Report will supersede the Quarterly Report. CAUSE: The cause of the non-filing is due to multiple issues. First, the addition of COVID-19 related funding added to the business manager’s workload. Second, due to the size of the District, the business manager not only performs duties associated with his own position, but also assists with other administrative duties. Third, there was a staff retirement in the business office, and the new employee hired in August 2023 has not yet been introduced to grant reporting. As mentioned in Finding #2024-002, the business manager is involved with nearly all transactions involving the business office. The business manager’s current workload, the additional COVID-19 funding, and the staff retirement caused other tasks to take priority over monitoring of grant expenditures and thus, led to the failure to file the required grant reports. EFFECT: The effect of the failure to file such reports caused the District to be out of compliance with PDE requirements. The noncompliance resulted in delayed funding from PDE under the ECIA Title and ESSER programs during the 2023-24 school year. PDE could further suspend funding on future grants, which would negatively impact the District’s cash flows. QUESTIONED COSTS: $0 PROPER PERSPECTIVE (SAMPLING): Because there were no quarterly reports filed in 2023-24, 0% of the reports were sampled. The audit sample was statistically valid. REPEAT FINDING: Yes. RECOMMENDATION: We recommend that the entire management team (superintendent, business manager, building principals, maintenance supervisor, etc.) identify and prioritize the duties each performs and determine those that can be reassigned to support staff, as well as whether the appropriate administrator is actually responsible for the duties they are performing. The business manager’s duties, as much as possible, should be limited to those directly involving the business office. With all administrative positions filled, duties that had shifted to the business manager should be able to revert to the appropriate individual. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current so that suspended grant payments resume. MANAGEMENT RESPONSE: Management agrees with the recommendations. The unique situation with the COVID-19 funding, coupled with shifts in the business manager’s duties over the last few years and the staff retirement has resulted in grant report filings becoming a lower priority. The management team will work together and will resume management team meetings to determine and monitor the duties for which each is responsible. Strides have been made in this regard, as the principals have become involved in Federal program training, budgeting, and scheduling. Although the aforementioned report submissions are delinquent and funding was suspended, some filings have been completed, and certain payments are forthcoming. However, management will begin to gradually involve the new business office employee in grant reporting to improve on grant compliance with reporting requirements.

Finding #2024-005; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: Management failed to meet the Pennsylvania Department of Education (PDE) deadlines for submission of the quarterly reports (“Reconciliation of Cash on Hand”) for its grants, including the ECIA Title programs and the Education Stabilization (ESSER/ARP) funding during the 2023-24 fiscal year. In addition, as of June 30, 2024, several Final Expenditure Reports (FERs) also remain due. CRITERIA: According to PDE reporting instructions, a “Required Report” represents a required filing for projects that received payments in a previous quarter. The report must be filed no later than the 10th working day following the quarter just ended. A “Delinquent Report” represents a required report that has not been submitted by the 10th working day of the month. Consequently, delinquent reports are not available for importation by the Comptroller’s Office. As such, all scheduled payments to the respective project are suspended until the report is sent. Delinquent reports must be filed no later than the 10th working day of the following month. There are circumstances where the Final Expenditure Report will supersede the Quarterly Report. CAUSE: The cause of the non-filing is due to multiple issues. First, the addition of COVID-19 related funding added to the business manager’s workload. Second, due to the size of the District, the business manager not only performs duties associated with his own position, but also assists with other administrative duties. Third, there was a staff retirement in the business office, and the new employee hired in August 2023 has not yet been introduced to grant reporting. As mentioned in Finding #2024-002, the business manager is involved with nearly all transactions involving the business office. The business manager’s current workload, the additional COVID-19 funding, and the staff retirement caused other tasks to take priority over monitoring of grant expenditures and thus, led to the failure to file the required grant reports. EFFECT: The effect of the failure to file such reports caused the District to be out of compliance with PDE requirements. The noncompliance resulted in delayed funding from PDE under the ECIA Title and ESSER programs during the 2023-24 school year. PDE could further suspend funding on future grants, which would negatively impact the District’s cash flows. QUESTIONED COSTS: $0 PROPER PERSPECTIVE (SAMPLING): Because there were no quarterly reports filed in 2023-24, 0% of the reports were sampled. The audit sample was statistically valid. REPEAT FINDING: Yes. RECOMMENDATION: We recommend that the entire management team (superintendent, business manager, building principals, maintenance supervisor, etc.) identify and prioritize the duties each performs and determine those that can be reassigned to support staff, as well as whether the appropriate administrator is actually responsible for the duties they are performing. The business manager’s duties, as much as possible, should be limited to those directly involving the business office. With all administrative positions filled, duties that had shifted to the business manager should be able to revert to the appropriate individual. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current so that suspended grant payments resume. MANAGEMENT RESPONSE: Management agrees with the recommendations. The unique situation with the COVID-19 funding, coupled with shifts in the business manager’s duties over the last few years and the staff retirement has resulted in grant report filings becoming a lower priority. The management team will work together and will resume management team meetings to determine and monitor the duties for which each is responsible. Strides have been made in this regard, as the principals have become involved in Federal program training, budgeting, and scheduling. Although the aforementioned report submissions are delinquent and funding was suspended, some filings have been completed, and certain payments are forthcoming. However, management will begin to gradually involve the new business office employee in grant reporting to improve on grant compliance with reporting requirements.

Finding #2024-006; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Internal controls should be in place to ensure that allowable costs under Federal awards are determined in accordance with generally accepted accounting principles (GAAP). (See Finding #2024-003 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures are lacking which leads to errors going undetected. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed and the payment of expenditures based on quotes rather than invoices was permitted. RECOMMENDATION: We recommend that procedures be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff should be involved in the cash/accounts payable function and should understand proper accounting principles. When an error is discovered, the business manager should be notified and the error documented and corrected in a timely manner. Effective controls should include a two-person monitoring of cash/accounts payable. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures in the business office will be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff will be more involved in the cash/accounts payable function and will be educated on proper accounting principles. If an error is discovered by the staff, the business manager will be notified and the error documented and corrected in a timely manner. Controls will include a two-person monitoring of cash/accounts payable.

Finding #2024-006; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Internal controls should be in place to ensure that allowable costs under Federal awards are determined in accordance with generally accepted accounting principles (GAAP). (See Finding #2024-003 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures are lacking which leads to errors going undetected. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed and the payment of expenditures based on quotes rather than invoices was permitted. RECOMMENDATION: We recommend that procedures be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff should be involved in the cash/accounts payable function and should understand proper accounting principles. When an error is discovered, the business manager should be notified and the error documented and corrected in a timely manner. Effective controls should include a two-person monitoring of cash/accounts payable. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures in the business office will be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff will be more involved in the cash/accounts payable function and will be educated on proper accounting principles. If an error is discovered by the staff, the business manager will be notified and the error documented and corrected in a timely manner. Controls will include a two-person monitoring of cash/accounts payable.

Finding #2024-006; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Internal controls should be in place to ensure that allowable costs under Federal awards are determined in accordance with generally accepted accounting principles (GAAP). (See Finding #2024-003 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures are lacking which leads to errors going undetected. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed and the payment of expenditures based on quotes rather than invoices was permitted. RECOMMENDATION: We recommend that procedures be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff should be involved in the cash/accounts payable function and should understand proper accounting principles. When an error is discovered, the business manager should be notified and the error documented and corrected in a timely manner. Effective controls should include a two-person monitoring of cash/accounts payable. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures in the business office will be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff will be more involved in the cash/accounts payable function and will be educated on proper accounting principles. If an error is discovered by the staff, the business manager will be notified and the error documented and corrected in a timely manner. Controls will include a two-person monitoring of cash/accounts payable.

Finding #2024-007; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Internal controls should be in place to ensure that proper procurement policies are followed adhering to both federal and state requirements. (See Finding #2024-004 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures over procurement are lacking. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed, resulting in noncompliance with procurement policies and requirements. RECOMMENDATION: We recommend that procurement procedures be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process should be cognizant of the federal and state thresholds for bids and quotes, including the District’s own policy. Effective controls should include at least a two-person monitoring of purchases. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures surrounding purchases will be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process will be informed of the federal and state thresholds for bids and quotes, including the District’s own policy. Controls will include a two-person monitoring of purchases.

Finding #2024-007; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Internal controls should be in place to ensure that proper procurement policies are followed adhering to both federal and state requirements. (See Finding #2024-004 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures over procurement are lacking. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed, resulting in noncompliance with procurement policies and requirements. RECOMMENDATION: We recommend that procurement procedures be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process should be cognizant of the federal and state thresholds for bids and quotes, including the District’s own policy. Effective controls should include at least a two-person monitoring of purchases. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures surrounding purchases will be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process will be informed of the federal and state thresholds for bids and quotes, including the District’s own policy. Controls will include a two-person monitoring of purchases.

Finding #2024-007; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Internal controls should be in place to ensure that proper procurement policies are followed adhering to both federal and state requirements. (See Finding #2024-004 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures over procurement are lacking. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed, resulting in noncompliance with procurement policies and requirements. RECOMMENDATION: We recommend that procurement procedures be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process should be cognizant of the federal and state thresholds for bids and quotes, including the District’s own policy. Effective controls should include at least a two-person monitoring of purchases. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures surrounding purchases will be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process will be informed of the federal and state thresholds for bids and quotes, including the District’s own policy. Controls will include a two-person monitoring of purchases.

Finding #2024-008; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: During our testing, it was noted that required grant reports were not filed during the 2023-24 fiscal year. This is an indication that internal controls are not in place to ensure compliance with timely and accurate grant filings. CRITERIA: Internal controls should be in place to ensure that grant reporting is performed accurately and timely. Delinquent reports subject the District to suspended grant payments. (See Finding #2024-005 in the Compliance section.) CAUSE: The cause of the lack of controls is due to multiple issues, as noted in Finding #2024-005 in the Compliance section. Ultimately, a lack of controls over grant approvals, spending timeframes, and workload prioritization contributed to the internal control deficiency and failure to submit required reports. EFFECT: The effect is that the internal controls over grant reporting are not functioning as designed. RECOMMENDATION: We recommend that procedures be modified, and internal controls followed to ensure accurate and timely filing of required grant reports. The management team involved with grants (superintendent, business manager, building principals, etc.) should be involved in modifying the procedures and implementing the controls. Controls should include an enhanced two-person monitoring of the grant process, from application through final reporting. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current. MANAGEMENT RESPONSE: Management agrees with the recommendations. The management team involved with grants will work to modify and improve the current procedures and will implement the controls surrounding grant compliance, from the application process through final reporting. The team will also continue to work to enhance our grant monitoring, including resuming management team meetings to keep everyone abreast of the status of grants. In addition, we will begin to gradually involve the new business office employee in grant reporting to improve on compliance with grant reporting requirements.

Finding #2024-008; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: During our testing, it was noted that required grant reports were not filed during the 2023-24 fiscal year. This is an indication that internal controls are not in place to ensure compliance with timely and accurate grant filings. CRITERIA: Internal controls should be in place to ensure that grant reporting is performed accurately and timely. Delinquent reports subject the District to suspended grant payments. (See Finding #2024-005 in the Compliance section.) CAUSE: The cause of the lack of controls is due to multiple issues, as noted in Finding #2024-005 in the Compliance section. Ultimately, a lack of controls over grant approvals, spending timeframes, and workload prioritization contributed to the internal control deficiency and failure to submit required reports. EFFECT: The effect is that the internal controls over grant reporting are not functioning as designed. RECOMMENDATION: We recommend that procedures be modified, and internal controls followed to ensure accurate and timely filing of required grant reports. The management team involved with grants (superintendent, business manager, building principals, etc.) should be involved in modifying the procedures and implementing the controls. Controls should include an enhanced two-person monitoring of the grant process, from application through final reporting. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current. MANAGEMENT RESPONSE: Management agrees with the recommendations. The management team involved with grants will work to modify and improve the current procedures and will implement the controls surrounding grant compliance, from the application process through final reporting. The team will also continue to work to enhance our grant monitoring, including resuming management team meetings to keep everyone abreast of the status of grants. In addition, we will begin to gradually involve the new business office employee in grant reporting to improve on compliance with grant reporting requirements.

Finding #2024-008; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: During our testing, it was noted that required grant reports were not filed during the 2023-24 fiscal year. This is an indication that internal controls are not in place to ensure compliance with timely and accurate grant filings. CRITERIA: Internal controls should be in place to ensure that grant reporting is performed accurately and timely. Delinquent reports subject the District to suspended grant payments. (See Finding #2024-005 in the Compliance section.) CAUSE: The cause of the lack of controls is due to multiple issues, as noted in Finding #2024-005 in the Compliance section. Ultimately, a lack of controls over grant approvals, spending timeframes, and workload prioritization contributed to the internal control deficiency and failure to submit required reports. EFFECT: The effect is that the internal controls over grant reporting are not functioning as designed. RECOMMENDATION: We recommend that procedures be modified, and internal controls followed to ensure accurate and timely filing of required grant reports. The management team involved with grants (superintendent, business manager, building principals, etc.) should be involved in modifying the procedures and implementing the controls. Controls should include an enhanced two-person monitoring of the grant process, from application through final reporting. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current. MANAGEMENT RESPONSE: Management agrees with the recommendations. The management team involved with grants will work to modify and improve the current procedures and will implement the controls surrounding grant compliance, from the application process through final reporting. The team will also continue to work to enhance our grant monitoring, including resuming management team meetings to keep everyone abreast of the status of grants. In addition, we will begin to gradually involve the new business office employee in grant reporting to improve on compliance with grant reporting requirements.

Finding #2024-003; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Allowable costs under Federal awards are to be determined in accordance with generally accepted accounting principles (GAAP). CAUSE: The cause was a misunderstanding of the term “encumbrance” by management. Instead of relying on purchase orders (POs) to encumber grant funds, checks were issued for expenditures that were not invoiced or incurred until after year end. EFFECT: This deficiency resulted in otherwise allowable ESSER expenditures to be erroneously recognized in 2023-24 instead of 2024-25. (Also see Finding #2024-001 under Section II.) QUESTIONED COSTS: $40,555 PROPER PERSPECTIVE (SAMPLING): A sample of sixty (60) totaling $923,850 (44.6% of population) was selected for testing of non-payroll related expenditures during the financial statement audit. Included in the sample were twenty-one (21) federal grant expenditures ($631,176, or 68.3% of sample). Of those, four (4) were ESSER costs of $40,555 (4.4% of sample) attributable to fiscal year 2024-25, not 2023-24. The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend the business office obtain a better understanding of encumbrances, especially with regard to grant programs, and that expenditures are recorded only for items or services received to ensure inclusion in the correct fiscal year. MANAGEMENT RESPONSE: Management agrees with the recommendations and will obtain a better understanding of encumbrances, especially with regard to grant programs, and will record expenditures only for items or services received.

Finding #2024-003; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Allowable costs under Federal awards are to be determined in accordance with generally accepted accounting principles (GAAP). CAUSE: The cause was a misunderstanding of the term “encumbrance” by management. Instead of relying on purchase orders (POs) to encumber grant funds, checks were issued for expenditures that were not invoiced or incurred until after year end. EFFECT: This deficiency resulted in otherwise allowable ESSER expenditures to be erroneously recognized in 2023-24 instead of 2024-25. (Also see Finding #2024-001 under Section II.) QUESTIONED COSTS: $40,555 PROPER PERSPECTIVE (SAMPLING): A sample of sixty (60) totaling $923,850 (44.6% of population) was selected for testing of non-payroll related expenditures during the financial statement audit. Included in the sample were twenty-one (21) federal grant expenditures ($631,176, or 68.3% of sample). Of those, four (4) were ESSER costs of $40,555 (4.4% of sample) attributable to fiscal year 2024-25, not 2023-24. The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend the business office obtain a better understanding of encumbrances, especially with regard to grant programs, and that expenditures are recorded only for items or services received to ensure inclusion in the correct fiscal year. MANAGEMENT RESPONSE: Management agrees with the recommendations and will obtain a better understanding of encumbrances, especially with regard to grant programs, and will record expenditures only for items or services received.

Finding #2024-003; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Allowable costs under Federal awards are to be determined in accordance with generally accepted accounting principles (GAAP). CAUSE: The cause was a misunderstanding of the term “encumbrance” by management. Instead of relying on purchase orders (POs) to encumber grant funds, checks were issued for expenditures that were not invoiced or incurred until after year end. EFFECT: This deficiency resulted in otherwise allowable ESSER expenditures to be erroneously recognized in 2023-24 instead of 2024-25. (Also see Finding #2024-001 under Section II.) QUESTIONED COSTS: $40,555 PROPER PERSPECTIVE (SAMPLING): A sample of sixty (60) totaling $923,850 (44.6% of population) was selected for testing of non-payroll related expenditures during the financial statement audit. Included in the sample were twenty-one (21) federal grant expenditures ($631,176, or 68.3% of sample). Of those, four (4) were ESSER costs of $40,555 (4.4% of sample) attributable to fiscal year 2024-25, not 2023-24. The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend the business office obtain a better understanding of encumbrances, especially with regard to grant programs, and that expenditures are recorded only for items or services received to ensure inclusion in the correct fiscal year. MANAGEMENT RESPONSE: Management agrees with the recommendations and will obtain a better understanding of encumbrances, especially with regard to grant programs, and will record expenditures only for items or services received.

Finding #2024-004; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Cost Principles require that allowable costs under Federal awards be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. With regard to obtaining bids or quotes for goods/supplies and services, both the Federal government and Pennsylvania establish thresholds for obtaining bids and quotes, with the most restrictive taking precedence. In addition, the District’s own policies require obtaining bids and price quotations for products and services where such bids or quotations are required by law. CAUSE: The cause was a misunderstanding by management of the requirement to utilize the more restrictive Pennsylvania imposed thresholds for the ESSER purchases in question, despite the higher thresholds under Uniform Guidance. Accordingly, the District obtained quotes for two (2) equipment purchases and one (1) service that required bids. EFFECT: The failure to obtain bids for the items purchased and service performed led to the District’s failure to comply with the Cost Principles contained in the Uniform Administrative Requirements. QUESTIONED COSTS: $63,147 PROPER PERSPECTIVE (SAMPLING): A sample of nine (9) totaling $596,207 (94.1% of population) was selected for testing of non-payroll related ESSER expenditures. Of those, required bids were not obtained for two (2) purchases of equipment and one (1) service performed (10.6% of sample). The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend that all personnel involved in purchasing, especially those in the business office, obtain a better understanding of the procurement thresholds established by both federal and state agencies, ensuring that bids or quotes are obtained, as necessary. Pennsylvania publishes an annual bulletin containing a chart for the various thresholds. This chart could be utilized as an easy reference. MANAGEMENT RESPONSE: Management agrees with the recommendation, and personnel involved in purchasing, especially those in the business office, will obtain a better understanding of the federal and state procurement thresholds, ensuring that bids or quotes will be obtained, as necessary. The Pennsylvania bulletin has been provided by the auditor, and we will use that as a reference, in addition to the District’s own policy.

Finding #2024-004; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Cost Principles require that allowable costs under Federal awards be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. With regard to obtaining bids or quotes for goods/supplies and services, both the Federal government and Pennsylvania establish thresholds for obtaining bids and quotes, with the most restrictive taking precedence. In addition, the District’s own policies require obtaining bids and price quotations for products and services where such bids or quotations are required by law. CAUSE: The cause was a misunderstanding by management of the requirement to utilize the more restrictive Pennsylvania imposed thresholds for the ESSER purchases in question, despite the higher thresholds under Uniform Guidance. Accordingly, the District obtained quotes for two (2) equipment purchases and one (1) service that required bids. EFFECT: The failure to obtain bids for the items purchased and service performed led to the District’s failure to comply with the Cost Principles contained in the Uniform Administrative Requirements. QUESTIONED COSTS: $63,147 PROPER PERSPECTIVE (SAMPLING): A sample of nine (9) totaling $596,207 (94.1% of population) was selected for testing of non-payroll related ESSER expenditures. Of those, required bids were not obtained for two (2) purchases of equipment and one (1) service performed (10.6% of sample). The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend that all personnel involved in purchasing, especially those in the business office, obtain a better understanding of the procurement thresholds established by both federal and state agencies, ensuring that bids or quotes are obtained, as necessary. Pennsylvania publishes an annual bulletin containing a chart for the various thresholds. This chart could be utilized as an easy reference. MANAGEMENT RESPONSE: Management agrees with the recommendation, and personnel involved in purchasing, especially those in the business office, will obtain a better understanding of the federal and state procurement thresholds, ensuring that bids or quotes will be obtained, as necessary. The Pennsylvania bulletin has been provided by the auditor, and we will use that as a reference, in addition to the District’s own policy.

Finding #2024-004; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Cost Principles require that allowable costs under Federal awards be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. With regard to obtaining bids or quotes for goods/supplies and services, both the Federal government and Pennsylvania establish thresholds for obtaining bids and quotes, with the most restrictive taking precedence. In addition, the District’s own policies require obtaining bids and price quotations for products and services where such bids or quotations are required by law. CAUSE: The cause was a misunderstanding by management of the requirement to utilize the more restrictive Pennsylvania imposed thresholds for the ESSER purchases in question, despite the higher thresholds under Uniform Guidance. Accordingly, the District obtained quotes for two (2) equipment purchases and one (1) service that required bids. EFFECT: The failure to obtain bids for the items purchased and service performed led to the District’s failure to comply with the Cost Principles contained in the Uniform Administrative Requirements. QUESTIONED COSTS: $63,147 PROPER PERSPECTIVE (SAMPLING): A sample of nine (9) totaling $596,207 (94.1% of population) was selected for testing of non-payroll related ESSER expenditures. Of those, required bids were not obtained for two (2) purchases of equipment and one (1) service performed (10.6% of sample). The audit sample was statistically valid. REPEAT FINDING: No. RECOMMENDATION: We recommend that all personnel involved in purchasing, especially those in the business office, obtain a better understanding of the procurement thresholds established by both federal and state agencies, ensuring that bids or quotes are obtained, as necessary. Pennsylvania publishes an annual bulletin containing a chart for the various thresholds. This chart could be utilized as an easy reference. MANAGEMENT RESPONSE: Management agrees with the recommendation, and personnel involved in purchasing, especially those in the business office, will obtain a better understanding of the federal and state procurement thresholds, ensuring that bids or quotes will be obtained, as necessary. The Pennsylvania bulletin has been provided by the auditor, and we will use that as a reference, in addition to the District’s own policy.

Finding #2024-005; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: Management failed to meet the Pennsylvania Department of Education (PDE) deadlines for submission of the quarterly reports (“Reconciliation of Cash on Hand”) for its grants, including the ECIA Title programs and the Education Stabilization (ESSER/ARP) funding during the 2023-24 fiscal year. In addition, as of June 30, 2024, several Final Expenditure Reports (FERs) also remain due. CRITERIA: According to PDE reporting instructions, a “Required Report” represents a required filing for projects that received payments in a previous quarter. The report must be filed no later than the 10th working day following the quarter just ended. A “Delinquent Report” represents a required report that has not been submitted by the 10th working day of the month. Consequently, delinquent reports are not available for importation by the Comptroller’s Office. As such, all scheduled payments to the respective project are suspended until the report is sent. Delinquent reports must be filed no later than the 10th working day of the following month. There are circumstances where the Final Expenditure Report will supersede the Quarterly Report. CAUSE: The cause of the non-filing is due to multiple issues. First, the addition of COVID-19 related funding added to the business manager’s workload. Second, due to the size of the District, the business manager not only performs duties associated with his own position, but also assists with other administrative duties. Third, there was a staff retirement in the business office, and the new employee hired in August 2023 has not yet been introduced to grant reporting. As mentioned in Finding #2024-002, the business manager is involved with nearly all transactions involving the business office. The business manager’s current workload, the additional COVID-19 funding, and the staff retirement caused other tasks to take priority over monitoring of grant expenditures and thus, led to the failure to file the required grant reports. EFFECT: The effect of the failure to file such reports caused the District to be out of compliance with PDE requirements. The noncompliance resulted in delayed funding from PDE under the ECIA Title and ESSER programs during the 2023-24 school year. PDE could further suspend funding on future grants, which would negatively impact the District’s cash flows. QUESTIONED COSTS: $0 PROPER PERSPECTIVE (SAMPLING): Because there were no quarterly reports filed in 2023-24, 0% of the reports were sampled. The audit sample was statistically valid. REPEAT FINDING: Yes. RECOMMENDATION: We recommend that the entire management team (superintendent, business manager, building principals, maintenance supervisor, etc.) identify and prioritize the duties each performs and determine those that can be reassigned to support staff, as well as whether the appropriate administrator is actually responsible for the duties they are performing. The business manager’s duties, as much as possible, should be limited to those directly involving the business office. With all administrative positions filled, duties that had shifted to the business manager should be able to revert to the appropriate individual. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current so that suspended grant payments resume. MANAGEMENT RESPONSE: Management agrees with the recommendations. The unique situation with the COVID-19 funding, coupled with shifts in the business manager’s duties over the last few years and the staff retirement has resulted in grant report filings becoming a lower priority. The management team will work together and will resume management team meetings to determine and monitor the duties for which each is responsible. Strides have been made in this regard, as the principals have become involved in Federal program training, budgeting, and scheduling. Although the aforementioned report submissions are delinquent and funding was suspended, some filings have been completed, and certain payments are forthcoming. However, management will begin to gradually involve the new business office employee in grant reporting to improve on grant compliance with reporting requirements.

Finding #2024-005; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: Management failed to meet the Pennsylvania Department of Education (PDE) deadlines for submission of the quarterly reports (“Reconciliation of Cash on Hand”) for its grants, including the ECIA Title programs and the Education Stabilization (ESSER/ARP) funding during the 2023-24 fiscal year. In addition, as of June 30, 2024, several Final Expenditure Reports (FERs) also remain due. CRITERIA: According to PDE reporting instructions, a “Required Report” represents a required filing for projects that received payments in a previous quarter. The report must be filed no later than the 10th working day following the quarter just ended. A “Delinquent Report” represents a required report that has not been submitted by the 10th working day of the month. Consequently, delinquent reports are not available for importation by the Comptroller’s Office. As such, all scheduled payments to the respective project are suspended until the report is sent. Delinquent reports must be filed no later than the 10th working day of the following month. There are circumstances where the Final Expenditure Report will supersede the Quarterly Report. CAUSE: The cause of the non-filing is due to multiple issues. First, the addition of COVID-19 related funding added to the business manager’s workload. Second, due to the size of the District, the business manager not only performs duties associated with his own position, but also assists with other administrative duties. Third, there was a staff retirement in the business office, and the new employee hired in August 2023 has not yet been introduced to grant reporting. As mentioned in Finding #2024-002, the business manager is involved with nearly all transactions involving the business office. The business manager’s current workload, the additional COVID-19 funding, and the staff retirement caused other tasks to take priority over monitoring of grant expenditures and thus, led to the failure to file the required grant reports. EFFECT: The effect of the failure to file such reports caused the District to be out of compliance with PDE requirements. The noncompliance resulted in delayed funding from PDE under the ECIA Title and ESSER programs during the 2023-24 school year. PDE could further suspend funding on future grants, which would negatively impact the District’s cash flows. QUESTIONED COSTS: $0 PROPER PERSPECTIVE (SAMPLING): Because there were no quarterly reports filed in 2023-24, 0% of the reports were sampled. The audit sample was statistically valid. REPEAT FINDING: Yes. RECOMMENDATION: We recommend that the entire management team (superintendent, business manager, building principals, maintenance supervisor, etc.) identify and prioritize the duties each performs and determine those that can be reassigned to support staff, as well as whether the appropriate administrator is actually responsible for the duties they are performing. The business manager’s duties, as much as possible, should be limited to those directly involving the business office. With all administrative positions filled, duties that had shifted to the business manager should be able to revert to the appropriate individual. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current so that suspended grant payments resume. MANAGEMENT RESPONSE: Management agrees with the recommendations. The unique situation with the COVID-19 funding, coupled with shifts in the business manager’s duties over the last few years and the staff retirement has resulted in grant report filings becoming a lower priority. The management team will work together and will resume management team meetings to determine and monitor the duties for which each is responsible. Strides have been made in this regard, as the principals have become involved in Federal program training, budgeting, and scheduling. Although the aforementioned report submissions are delinquent and funding was suspended, some filings have been completed, and certain payments are forthcoming. However, management will begin to gradually involve the new business office employee in grant reporting to improve on grant compliance with reporting requirements.

Finding #2024-005; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: Management failed to meet the Pennsylvania Department of Education (PDE) deadlines for submission of the quarterly reports (“Reconciliation of Cash on Hand”) for its grants, including the ECIA Title programs and the Education Stabilization (ESSER/ARP) funding during the 2023-24 fiscal year. In addition, as of June 30, 2024, several Final Expenditure Reports (FERs) also remain due. CRITERIA: According to PDE reporting instructions, a “Required Report” represents a required filing for projects that received payments in a previous quarter. The report must be filed no later than the 10th working day following the quarter just ended. A “Delinquent Report” represents a required report that has not been submitted by the 10th working day of the month. Consequently, delinquent reports are not available for importation by the Comptroller’s Office. As such, all scheduled payments to the respective project are suspended until the report is sent. Delinquent reports must be filed no later than the 10th working day of the following month. There are circumstances where the Final Expenditure Report will supersede the Quarterly Report. CAUSE: The cause of the non-filing is due to multiple issues. First, the addition of COVID-19 related funding added to the business manager’s workload. Second, due to the size of the District, the business manager not only performs duties associated with his own position, but also assists with other administrative duties. Third, there was a staff retirement in the business office, and the new employee hired in August 2023 has not yet been introduced to grant reporting. As mentioned in Finding #2024-002, the business manager is involved with nearly all transactions involving the business office. The business manager’s current workload, the additional COVID-19 funding, and the staff retirement caused other tasks to take priority over monitoring of grant expenditures and thus, led to the failure to file the required grant reports. EFFECT: The effect of the failure to file such reports caused the District to be out of compliance with PDE requirements. The noncompliance resulted in delayed funding from PDE under the ECIA Title and ESSER programs during the 2023-24 school year. PDE could further suspend funding on future grants, which would negatively impact the District’s cash flows. QUESTIONED COSTS: $0 PROPER PERSPECTIVE (SAMPLING): Because there were no quarterly reports filed in 2023-24, 0% of the reports were sampled. The audit sample was statistically valid. REPEAT FINDING: Yes. RECOMMENDATION: We recommend that the entire management team (superintendent, business manager, building principals, maintenance supervisor, etc.) identify and prioritize the duties each performs and determine those that can be reassigned to support staff, as well as whether the appropriate administrator is actually responsible for the duties they are performing. The business manager’s duties, as much as possible, should be limited to those directly involving the business office. With all administrative positions filled, duties that had shifted to the business manager should be able to revert to the appropriate individual. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current so that suspended grant payments resume. MANAGEMENT RESPONSE: Management agrees with the recommendations. The unique situation with the COVID-19 funding, coupled with shifts in the business manager’s duties over the last few years and the staff retirement has resulted in grant report filings becoming a lower priority. The management team will work together and will resume management team meetings to determine and monitor the duties for which each is responsible. Strides have been made in this regard, as the principals have become involved in Federal program training, budgeting, and scheduling. Although the aforementioned report submissions are delinquent and funding was suspended, some filings have been completed, and certain payments are forthcoming. However, management will begin to gradually involve the new business office employee in grant reporting to improve on grant compliance with reporting requirements.

Finding #2024-006; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Internal controls should be in place to ensure that allowable costs under Federal awards are determined in accordance with generally accepted accounting principles (GAAP). (See Finding #2024-003 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures are lacking which leads to errors going undetected. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed and the payment of expenditures based on quotes rather than invoices was permitted. RECOMMENDATION: We recommend that procedures be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff should be involved in the cash/accounts payable function and should understand proper accounting principles. When an error is discovered, the business manager should be notified and the error documented and corrected in a timely manner. Effective controls should include a two-person monitoring of cash/accounts payable. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures in the business office will be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff will be more involved in the cash/accounts payable function and will be educated on proper accounting principles. If an error is discovered by the staff, the business manager will be notified and the error documented and corrected in a timely manner. Controls will include a two-person monitoring of cash/accounts payable.

Finding #2024-006; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Internal controls should be in place to ensure that allowable costs under Federal awards are determined in accordance with generally accepted accounting principles (GAAP). (See Finding #2024-003 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures are lacking which leads to errors going undetected. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed and the payment of expenditures based on quotes rather than invoices was permitted. RECOMMENDATION: We recommend that procedures be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff should be involved in the cash/accounts payable function and should understand proper accounting principles. When an error is discovered, the business manager should be notified and the error documented and corrected in a timely manner. Effective controls should include a two-person monitoring of cash/accounts payable. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures in the business office will be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff will be more involved in the cash/accounts payable function and will be educated on proper accounting principles. If an error is discovered by the staff, the business manager will be notified and the error documented and corrected in a timely manner. Controls will include a two-person monitoring of cash/accounts payable.

Finding #2024-006; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Internal controls should be in place to ensure that allowable costs under Federal awards are determined in accordance with generally accepted accounting principles (GAAP). (See Finding #2024-003 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures are lacking which leads to errors going undetected. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed and the payment of expenditures based on quotes rather than invoices was permitted. RECOMMENDATION: We recommend that procedures be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff should be involved in the cash/accounts payable function and should understand proper accounting principles. When an error is discovered, the business manager should be notified and the error documented and corrected in a timely manner. Effective controls should include a two-person monitoring of cash/accounts payable. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures in the business office will be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff will be more involved in the cash/accounts payable function and will be educated on proper accounting principles. If an error is discovered by the staff, the business manager will be notified and the error documented and corrected in a timely manner. Controls will include a two-person monitoring of cash/accounts payable.

Finding #2024-007; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Internal controls should be in place to ensure that proper procurement policies are followed adhering to both federal and state requirements. (See Finding #2024-004 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures over procurement are lacking. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed, resulting in noncompliance with procurement policies and requirements. RECOMMENDATION: We recommend that procurement procedures be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process should be cognizant of the federal and state thresholds for bids and quotes, including the District’s own policy. Effective controls should include at least a two-person monitoring of purchases. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures surrounding purchases will be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process will be informed of the federal and state thresholds for bids and quotes, including the District’s own policy. Controls will include a two-person monitoring of purchases.

Finding #2024-007; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Internal controls should be in place to ensure that proper procurement policies are followed adhering to both federal and state requirements. (See Finding #2024-004 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures over procurement are lacking. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed, resulting in noncompliance with procurement policies and requirements. RECOMMENDATION: We recommend that procurement procedures be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process should be cognizant of the federal and state thresholds for bids and quotes, including the District’s own policy. Effective controls should include at least a two-person monitoring of purchases. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures surrounding purchases will be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process will be informed of the federal and state thresholds for bids and quotes, including the District’s own policy. Controls will include a two-person monitoring of purchases.

Finding #2024-007; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: In 2023-24, the District failed to obtain required bids for certain goods/services purchased, but rather only obtained quotes. CRITERIA: Internal controls should be in place to ensure that proper procurement policies are followed adhering to both federal and state requirements. (See Finding #2024-004 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures over procurement are lacking. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed, resulting in noncompliance with procurement policies and requirements. RECOMMENDATION: We recommend that procurement procedures be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process should be cognizant of the federal and state thresholds for bids and quotes, including the District’s own policy. Effective controls should include at least a two-person monitoring of purchases. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures surrounding purchases will be modified and internal controls followed to ensure that bids or quotes are obtained for goods/supplies and services, as required. Management and any staff involved in the purchasing process will be informed of the federal and state thresholds for bids and quotes, including the District’s own policy. Controls will include a two-person monitoring of purchases.

Finding #2024-008; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: During our testing, it was noted that required grant reports were not filed during the 2023-24 fiscal year. This is an indication that internal controls are not in place to ensure compliance with timely and accurate grant filings. CRITERIA: Internal controls should be in place to ensure that grant reporting is performed accurately and timely. Delinquent reports subject the District to suspended grant payments. (See Finding #2024-005 in the Compliance section.) CAUSE: The cause of the lack of controls is due to multiple issues, as noted in Finding #2024-005 in the Compliance section. Ultimately, a lack of controls over grant approvals, spending timeframes, and workload prioritization contributed to the internal control deficiency and failure to submit required reports. EFFECT: The effect is that the internal controls over grant reporting are not functioning as designed. RECOMMENDATION: We recommend that procedures be modified, and internal controls followed to ensure accurate and timely filing of required grant reports. The management team involved with grants (superintendent, business manager, building principals, etc.) should be involved in modifying the procedures and implementing the controls. Controls should include an enhanced two-person monitoring of the grant process, from application through final reporting. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current. MANAGEMENT RESPONSE: Management agrees with the recommendations. The management team involved with grants will work to modify and improve the current procedures and will implement the controls surrounding grant compliance, from the application process through final reporting. The team will also continue to work to enhance our grant monitoring, including resuming management team meetings to keep everyone abreast of the status of grants. In addition, we will begin to gradually involve the new business office employee in grant reporting to improve on compliance with grant reporting requirements.

Finding #2024-008; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: During our testing, it was noted that required grant reports were not filed during the 2023-24 fiscal year. This is an indication that internal controls are not in place to ensure compliance with timely and accurate grant filings. CRITERIA: Internal controls should be in place to ensure that grant reporting is performed accurately and timely. Delinquent reports subject the District to suspended grant payments. (See Finding #2024-005 in the Compliance section.) CAUSE: The cause of the lack of controls is due to multiple issues, as noted in Finding #2024-005 in the Compliance section. Ultimately, a lack of controls over grant approvals, spending timeframes, and workload prioritization contributed to the internal control deficiency and failure to submit required reports. EFFECT: The effect is that the internal controls over grant reporting are not functioning as designed. RECOMMENDATION: We recommend that procedures be modified, and internal controls followed to ensure accurate and timely filing of required grant reports. The management team involved with grants (superintendent, business manager, building principals, etc.) should be involved in modifying the procedures and implementing the controls. Controls should include an enhanced two-person monitoring of the grant process, from application through final reporting. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current. MANAGEMENT RESPONSE: Management agrees with the recommendations. The management team involved with grants will work to modify and improve the current procedures and will implement the controls surrounding grant compliance, from the application process through final reporting. The team will also continue to work to enhance our grant monitoring, including resuming management team meetings to keep everyone abreast of the status of grants. In addition, we will begin to gradually involve the new business office employee in grant reporting to improve on compliance with grant reporting requirements.

Finding #2024-008; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: During our testing, it was noted that required grant reports were not filed during the 2023-24 fiscal year. This is an indication that internal controls are not in place to ensure compliance with timely and accurate grant filings. CRITERIA: Internal controls should be in place to ensure that grant reporting is performed accurately and timely. Delinquent reports subject the District to suspended grant payments. (See Finding #2024-005 in the Compliance section.) CAUSE: The cause of the lack of controls is due to multiple issues, as noted in Finding #2024-005 in the Compliance section. Ultimately, a lack of controls over grant approvals, spending timeframes, and workload prioritization contributed to the internal control deficiency and failure to submit required reports. EFFECT: The effect is that the internal controls over grant reporting are not functioning as designed. RECOMMENDATION: We recommend that procedures be modified, and internal controls followed to ensure accurate and timely filing of required grant reports. The management team involved with grants (superintendent, business manager, building principals, etc.) should be involved in modifying the procedures and implementing the controls. Controls should include an enhanced two-person monitoring of the grant process, from application through final reporting. In addition, with the new business office employee hired in August 2023, we recommend the District involve the new staff person to assist in bringing all PDE filings current. MANAGEMENT RESPONSE: Management agrees with the recommendations. The management team involved with grants will work to modify and improve the current procedures and will implement the controls surrounding grant compliance, from the application process through final reporting. The team will also continue to work to enhance our grant monitoring, including resuming management team meetings to keep everyone abreast of the status of grants. In addition, we will begin to gradually involve the new business office employee in grant reporting to improve on compliance with grant reporting requirements.