Audit 375473

Finding 2025-004 Lack of Internal Controls over Reporting Federal Agency: U.S. Department of Agriculture, passed through the State of Alaska, Department of Education and Early Development Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553 and 10.555 Award Year: 2025 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Program requirements state that each month’s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained to justify all meals claimed and documenting that all program funds were spent only on Child Nutrition Program costs. Condition/Context: The District did not adhere to proper recordkeeping requirements specified in the program requirements. During our review of claim reports filed with the State of Alaska, we noted that two of three reports tested lacked sufficient records to substantiate the underlying report figures. Cause: Lack of internal control over reporting. Effect: Failure to follow compliance reporting requirements could result in loss of federal funding. Questioned Costs: Actual and likely questioned costs are below the reporting threshold of $25,000. Repeat finding: This is not a repeat finding, therefore we believe it to be an isolated instance. Recommendation: We recommend that management complies with all reporting requirements and implements additional internal control procedures over recordkeeping and reporting.

Finding 2025-005 Lack of Internal Controls over Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: U.S. Department of Agriculture, passed through the State of Alaska, Department of Education and Early Development Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553 and 10.555 Award Year: 2025 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Internal controls and financial policies must be adhered to, to ensure charges to grants are adequately supported. All cash and payroll disbursements must be accompanied by supporting documentation, including invoices, proper approval, and approved PAF’s. 2 CFR Section 200.303 requires entities establish and maintain internal controls over federal awards. Condition and Context: Multiple transactions tested lacked the necessary supporting documentation, including invoices and evidence of approval. During our testing of internal controls over the cash disbursement system, we tested a sample of twenty-five (25) transactions and noted the following errors: six (6) transactions did not have supporting documentation such as bills or invoices. Twenty-three (23) transactions did not have purchase orders or approval. During our testing of internal controls over payroll transactions, we tested a sample of eight (8) payroll transactions and noted that two (2) did not have approved personnel action forms. Cause: Lack of internal controls over cash and payroll disbursements and maintaining related supporting documentation. Effect: This could lead to a material misstatement for cash disbursement and payroll related items in the financial statements. Failure to follow compliance requirements could result in loss of federal funding. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding, therefore we believe it to be an isolated instance. Recommendation: Policies and procedures regarding internal controls over cash and payroll disbursements must be strengthened to ensure disbursements charged to grants are properly approved and accompanied by adequate supporting documentation.