Audit 370564

Unsupported Expenditures – Education Stabilization Funds Federal Program and Award: Education Stabilization Funds The objective of the GEER Fund (84.425C) is to provide local educational agencies (LEAs), and other education-related entities with emergency assistance as a result of the Coronavirus Disease 2019 (COVID-19). The objective of the ESSER Fund (84.425D) is to provide state educational agencies (SEAs) and LEAs, including charter schools that are LEAs, with emergency relief funds to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. CFDA Numbers: 84.425C & 84.425D Pass-Through Entity: None Subrecipient Information: None Criteria: The Uniform Guidance (2 CFR Part 200) specific to these specific CFDA numbers (84.425C and 84.425D) requires that expenditures be documented and well supported for meeting the criteria of allowable costs. Type of Compliance Requirement: Allowable Costs Direct or Indirect: Direct Condition: The District expensed payroll costs through journal entry to the respective ESSR I, ESSR II, and GEER funds but could not produce records of what employees, their job duties, and or functions were being performed to meet the allowable cost criteria. In most cases we received no documentation for any of the journal entries that were expensed to the grants. Documentation of indirect costs expensed to the grant and the methodology behind the indirect costs could not be located. Additionally, invoices for some individual purchases of equipment could not be located. Cause: The business manager in place at the time of the audit did not possess the skills knowledge and experience to properly maintain and operate an accounting system for the respective grant funds. The external certified public accountant that was hired did all they could to help get the District grants drawn down and processed. This individual also did not receive adequate response or documentation from District personnel. Effect: During the audit we were unable to obtain documentation of 79% of the overall sample. This is one of many shortcomings in the District’s financial reporting that contributed to a disclaimed audit opinion for the June 30, 2022, financial statements. The business manager that was in place during the 2022 audit year has been replaced at the end of 2024. Questioned Costs: $1,448,173 (extrapolated - which was 79% of $1,833,131 in total costs) disclosed on the Schedule of Expenditures of Federal Awards for the total Education Stabilization Fund expenditures under CFDA numbers 84.425D and 84.25C. Prior Year Finding: No Recommendation: The District must document and retain records for all federal expenditures as part of their system of internal controls over financial reporting and compliance with federal grant expenditures. The District should keep these records electronically in a cloud or server-based environment. The current process is retaining records in paper filing and several binders of printout which was inadequate as the information was unable to be located as well as the corresponding support.

Reporting – Education Stabilization Funds Federal Program and Award: Education Stabilization Funds The objective of the GEER Fund (84.425C) is to provide local educational agencies (LEAs), and other education-related entities with emergency assistance as a result of the Coronavirus Disease 2019 (COVID-19). The objective of the ESSER Fund (84.425D) is to provide state educational agencies (SEAs) and LEAs, including charter schools that are LEAs, with emergency relief funds to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. CFDA Numbers: 84.425C & 84.425D Pass-Through Entity: None Subrecipient Information: None Criteria: The Uniform Guidance (2 CFR Part 200) specific to these specific CFDA numbers (84.425C and 84.425D) requires that the District support the various reports filed for compliance with proper documentation of the revenues and expenses. Type of Compliance Requirement: Reporting Direct or Indirect: Direct Condition: The District provided no documentation for the associated reports that could be deciphered in any reasonable fashion to substantiate the accuracy of the information reported Cause: The business manager in place at the time of the audit did not possess the skills knowledge and experience to properly maintain and operate an accounting system for the respective grant funds. The external certified public accountant that was hired did all they could to help get the District grant reporting processed. This individual also did not receive adequate response or documentation from District personnel. Effect: Reports that were required to be filed with the respective granting agency for ESSR I, ESSR II, and GEER expenditures under CFDA numbers 84.425C and 84.425D. Questioned Costs: None Prior Year Finding: No Recommendation: The District must document and retain records for all federal expenditures as part of their system of internal controls over financial reporting and compliance with federal grant expenditures. The District should keep these records electronically in a cloud or server-based environment. Reports should be reviewed by an individual outside the process to ensure that proper documentation is being performed should the reports need to be recreated in the future. The current process is retaining records in paper filing and several binders of printout which was inadequate as the information was unable to be located as well as the corresponding support. Business managers also hold information on their hard drives and when turnover occurs in the position under difficult circumstances the information is deleted. A cloud based information retention process would eliminate this undue risk.