Finding 2022 – 003: Reporting: Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Criteria: Uniform Guidance 2 CFR §200.510 requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements [that]… at a minimum shall…list individual Federal programs by Federal agency… [and] provide total Federal awards expenditures for each individual Federal program and the Assistance Listing Number (ALN) or other identifying number when the ALN information is not available.” In accordance with Uniform Guidance, the School District is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition: During fiscal year 2022, the School District did not have sufficient controls in place to ensure the SEFA accurately reflected each award’s federal expenditures. There were differences noted in reconciling expenditures from the original SEFA to the trial balance. These errors were corrected through adjustments proposed as part of the audit, and the final version of the SEFA reconciles to the School District’s general ledger. Questioned Costs: None. Cause: Insufficient training or understanding of Uniform Guidance, including some of the required elements of the SEFA, contributed to this finding. Effect: The School District could not produce an accurate and timely SEFA, which required additional effort and resources by the School District and auditor during the audit process. Recommendation: We recommend that the School District becomes familiar with the SEFA reporting elements required by Uniform Guidance and develop and implement a review process to ensure compliance with those reporting requirements. These processes and controls should include reconciling SEFA federal expenditures to the current year general ledger expenditures and reviewing other grant related information to ensure accuracy. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2022-004: Activities Allowed and Unallowed, Allowable Costs (Compliance; Internal Controls Over Compliance) Material Weakness Criteria: Uniform Guidance 2 CFR, Part §200.303(a) requires that non-federal entities must establish and maintain effective internal control 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The School District received and expended section 7007 Construction Impact Aid. According to program specific compliance requirements, the School District must use these funds for construction as defined in Section 7013(3) of the Elementary and Secondary Education Act. Under Section 7013(3), the term "construction" includes (a) preparing drawings and specifications for school facilities; (b) erecting, building, acquiring, altering, remodeling, repairing, or extending school facilities; (c) inspecting and supervising the construction of school facilities; and (d) debt servicing for such activities (sections 7007 and 7013(3) of ESEA (20 USC 7707 and 7713)). Condition: During the review of the School’s internal controls related to Impact Aid expenditures, a sample of 67 transactions was tested for both control effectiveness and compliance. The School did not provide evidence of appropriate approval for any of the transactions selected for control testing. In addition, none of the transactions selected for compliance testing included proper supporting invoice documentation. As a result, alternative audit procedures were performed, including direct confirmations to Dick Anderson Construction and Cushing Terrell. Through these confirmations, expenditures totaling $2,415,667.01 and $313,682.20, respectively, were confirmed. Questioned Costs: Known = $645,081.79 Cause: The School District does not have established internal control policies and procedures to ensure appropriate supporting documentation and approvals are obtained prior to the disbursements being processed. Effect: The School District is not in compliance with Activities Allowed and Unallowed and Allowable Costs compliance requirements for the Impact Aid major program. This could lead to sanctions by the funding agencies. Recommendation: We recommend the School District become familiar with requirements of 2 CFR, Part §200.303(a) and establish appropriate internal control policies and procedures and that all staff be trained on those policies and procedures so they are familiar with the requirements. We further recommend the School District does not process payment for disbursements that do not contain sufficient, appropriate supporting documentation and necessary approvals. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2022 – 005: Reporting – Late Data Collection Form Submission Criteria: Uniform Guidance requires an entity expending more than $750,000 of federal funds within a fiscal year to have the data collection form and reporting package submitted within nine months after the end of the audit period. Condition: The School District’s audited financial statements were not submitted to the Federal Audit Clearinghouse by the due date of March 31, 2023. Questioned Costs: None. Cause: A lack of timely general ledger reconciliations contributed to the failure to timely file reports. Effect: The School District is not in compliance with the reporting requirements set forth in the Compliance Supplement which could lead to sanctions by the funding sources. Recommendation: We recommend that the School District implement procedures to ensure submission of the data collection form and reporting package to the federal audit clearinghouse within the nine-month due date. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.