Audit 371424

2024-011 Document Policies and Procedures over Federal Awards (Significant Deficiency) Cluster/Program: All Federal Programs Type of Finding: Compliance – Other Matters Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement: OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) established significant requirements related to Federal awards. The requirements stipulate that federal award recipients must document their policies and procedures over certain aspects of financial program management. Specifically, written policies are required for the following: • Determination of allowable costs • Employee travel • Cash Management • Procurement and Suspension and Debarment • Subrecipient monitoring and management. Condition: The School District has not formalized written policies and procedures related to Federal awards as required under Uniform Guidance. Cause: Weaknesses in the formal documentation of internal controls. Effect: There are no formal policies related to federal grant activity noted above. Questioned Costs: There are no questioned costs as a result of this finding as there are no costs directly associated with this compliance requirement. Identification as Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat of finding 2023-013. Recommendation: The School District should ensure that written policies and procedures are compiled and adopted as soon as practicable to ensure compliance with the Uniform Guidance. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.

2024-010 Maintenance of Effort (Material Weakness) Federal Agency: U.S. Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: Special Education Cluster Assistance Listing Numbers: 84.027 & 84.173 Passed-through Identification: 20230296, 20240542 Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Under 34 CFR 300.203, school districts receiving federal Individuals with Disabilities Education Act (IDEA) funds must meet the Maintenance of Effort (MOE) requirement. MOE consists of two components: • Eligibility (Budgeted MOE): The district must budget at least the same amount of local or state and local funds for special education in the current fiscal year as it did in the prior fiscal year. • Compliance (Actual MOE): At year-end, the district must demonstrate that actual local or state and local expenditures for special education were at least equal to the prior year’s level. Additionally, the State of New Hampshire’s MOE worksheet is used to determine compliance with both requirements and must be completed using financial data that reflects only special education-related expenditures within the general fund. Condition: During our audit, we noted that the district completed both the eligibility (budgeted) and compliance (actual) sections of the required State of New Hampshire MOE worksheet using total general fund budgeted and actual expenditures, rather than isolating special education-specific expenditures. As a result, the data used for MOE reporting did not accurately reflect the district’s financial commitment to special education. Effect: Because the worksheet was completed using total general fund figures rather than special education-only amounts, the district may not have accurately demonstrated compliance with the MOE requirement. This misreporting could lead to noncompliance with federal and state regulations and, if found to be out of compliance, could result in financial consequences such as the repayment of federal IDEA funds or adjustments to future allocations. Cause: Inexperienced staff: lack of sufficient training. Questioned Costs: $88,481 Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat of finding 2023-012. Recommendation: We recommend that the district provide targeted training for personnel responsible for preparing the MOE worksheet to ensure they understand the distinction between total general fund expenditures and special education-specific amounts. Additionally, the district should implement an internal review process to verify the accuracy of data used for MOE reporting. If necessary, the district should work with the New Hampshire Department of Education to correct and resubmit the worksheet using the appropriate financial figures. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.

2024-009 Excess Food Service Fund Balance (Material Weakness) Federal Agency: U.S. Department of Agriculture Pass-through Agency: New Hampshire Department of Education Cluster/Program: Child Nutrition Cluster Assistance Listing Numbers: 10.553 & 10.555 Passed-through Identification: N/A Compliance Requirement: Special Tests and Provisions Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the School District, as a recipient of Federal funds, must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, under 7 CFR, 210.14(b), Net Cash Resources, “the school food authority shall limit its net cash resources to an amount that does not exceed 3 months average expenditures for its nonprofit school food service.” Condition: During review of the food service unassigned fund balance, it was noted that the balance exceeded three months’ average expenditures. The fund balance in the food service fund amounted to $60,318 whereas three months’ average expenditures is $51,839. This generates excess fund balance of $8,479. Effect: The School District is not in compliance with CFR Title 7, 210.14(b) by maintaining fund balance more than three months average expenditures. Cause: Lack of administrative oversight. Questioned Costs: $8,479. Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat of finding 2023-011. Recommendation: We recommend that the School District take immediate steps to reduce its net cash resources by having an acceptable, approved plan for using surplus fund balance. Since program funds must be used only for program purposes, excess fund balance must be reduced by improving the quality of food served or purchasing needed supplies, services, or equipment unless otherwise directed by the State of New Hampshire Department of Education. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.