Audit 373022

84.010 TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES – DEPARTMENT OF EDUCATION – COLORADO DEPARTMENT OF EDUCATION PASS-THROUGH 2024-001 ALLOWABLE COSTS 1. Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles), prescribe the cost accounting requirements associated with the administration of Federal awards by (1) States, local governments, and Indian tribes. 2. Condition: Multiple BOCES member districts did not provide adequate documentation to support the salary and benefit costs that they submitted for BOCES reimbursement as required by the cost accounting requirements. 3. Context: While the BOCES is ultimately responsible for properly accounting for grant eligible costs, the BOCES does ”flowthrough” reimbursement to its member districts for salaries and benefits that are incurred directly by those districts. As such, the BOCES requires the member districts to retain proper support of Time and Effort at the district level which is to be available upon request. In multiple instances the Time and Effort documentation was either not provided or not adequate to support the allowable costs. 4. Cause: It appears that prior training provided by the BOCES to the member districts with regards to costs documentation is no longer being followed. As evidenced in the review of BOCES level salaries and benefits charged to other federal grants, BOCES level documentation is adequate and supports the belief that BOCES staff understands allowable costs documentation requirements. In addition, audits prior to June 30, 2023, have not reflected this level of documentation deficiency at the member districts. See Schedule of Prior Year Findings Finding 2023-002 regarding a similar issue noted for the year ended June 30, 2023. 5. Effect: Significant amounts of the salaries and benefits charged to the grant were not adequately supported and are therefore considered questioned costs as discussed below. 6. Questioned Cost: We tested member “flowthrough” costs which represented 93% of the $1,266,027 of costs charged to the grant. We further sampled approximately 79% of those “flowthrough” expenses to determine whether the costs were allowable. Our sample included costs submitted by six member districts. We believe our sampling represents a statistically valid sample. Two of the member districts provided adequate documentation, representing approximately 75% of the total dollars sampled. Of the remaining four districts, two districts, representing 6% of the remaining dollars sampled, submitted time and effort documentation that were for shared employees that did not include adequate time records supporting the percentage of the employees charged to the grant. One of the remaining districts, around 7% of the sampled dollars, provided detail payroll records but did not provide any time and effort documentation. The final district, representing approximately 12% of the sampled dollars, did not provide any identifiable personnel records or time and effort documentation. The only information provided by this district was a batched payroll general ledger. In total 24.49% of the sampled costs were not deemed adequately supported. This extrapolates to an estimated $268,488 in questioned costs for the 84.010 Title I grant. 7. Recommendation: As time and effort documentation was noted as an issued in the prior year Single Audit for a different federal grant, we will reiterate and strengthen our recommendation. We are confident that the BOCES staff understands the documentation requirements for grant expenditures. However, the BOCES has not adequately followed up on prior training of member district staff to insure that they are also maintaining adequate documentation. As such, the BOCES will want to reiterate documentation requirements annually. The BOCES may also want to require additional support at the time that reimbursement requests are submitted to insure that the member districts are documenting their disbursements timely. We will continue to recommend that the BOCES ensure, as part of their annual grant closeout, that they have all documentation required to support grant expenditures maintained at the BOCES level in lieu of requesting that information on an as needed basis. 8. Views of Responsible Officials: See Corrective Action Plan on page 15-16.