Audit 392940

2025-004: DUPLICATE COSTS CHARGED TO MULTIPLE FEDERAL GRANTS Program: 84.299 Indian Education – Special Programs for Indian Children 84.184 School Safety National Activities Criteria: Uniform Guidance requires that costs charged to federal awards be allowable, allocable, and not charged to more than one federal program. Condition: During testing of grant expenditures, we identified instances where duplicate costs were submitted for reimbursement through multiple federal grants. Repeat Finding: No Questioned Costs: Questioned costs totaling $8,535 were identified. Of this amount: $3,169 related to ALN 84.299 – Indian Education – Special Programs for Indian Children $5,366 related to ALN 84.184 – School Safety National Activities Context: During our testing of grant expenditures, we selected a sample of transactions charged to major programs. In our sample, we identified duplicate costs totaling $8,535 that had been recorded twice in the accounting system and subsequently submitted for reimbursement under federal awards. The duplicate entries were not identified during the bank reconciliation process and were therefore included in reimbursement requests submitted to the grantor agencies. Cause: The ESU does not have sufficient controls in place to ensure that expenditures are tracked and reviewed across grants to prevent duplicate reimbursement. Potential Effect: Duplicate charging of costs results in noncompliance with federal requirements and may lead to questioned costs, repayment of federal funds, and increased scrutiny by grantor agencies. Recommendation: We recommend that the ESU strengthen procedures over grant expenditure tracking and review to ensure costs are charged to only one federal program. This should include implementing controls to identify duplicate charges prior to submission and improving coordination across grant reporting processes. Response: Management will review current grant tracking and reimbursement procedures and pursue improvements, as appropriate, to strengthen coordination across grant programs. Opportunities to enhance review processes prior to submission will also be considered to help minimize duplicate charges and support compliance with federal requirements.

2025-005: INDIRECT COSTS NOT CLAIMED Program: 84.299 Indian Education – Special Programs for Indian Children 84.184 School Safety National Activities Criteria: Uniform Guidance allows recipients to recover indirect costs using an approved indirect cost rate. Proper grant administration requires that allowable costs be identified and claimed consistently. Condition: For ALN 84.299 – Indian Education – Special Programs for Indian Children, indirect costs were not submitted for reimbursement for April 2025. Direct costs submitted for that month totaled $401,824. Applying the approved indirect cost rate of 13.41%, allowable indirect costs for the month would have been approximately $53,885. In addition, for ALN 84.184 – School Safety National Activities, we identied multiple differences in indirect cost calculations and submissions during the year. Applying the approved indirect cost rate of 13.41%, allowable indirect costs for the period would have been approximately $463,131. Indirect costs claimed were $311,310, resulting in a difference of $151,821. Repeat Finding: No Questioned Costs: N/A Context: During testing of reimbursement requests for major programs, we reviewed the calculation of indirect costs applied to reported direct expenditures. We identified one month in which indirect costs were not claimed for ALN 84.299 and multiple instances during the year in which indirect costs were inconsistently calculated or omitted for ALN 84.184. The identified amounts represent the difference between the allowable indirect costs based on the approved rate and the amounts actually claimed. Cause: Procedures were not in place to ensure indirect costs were calculated and submitted for reimbursement each reporting period. Potential Effect: Failure to claim allowable indirect costs results in under recovery of federal funds and indicates weaknesses in grant monitoring and reporting processes. Recommendation: We recommend that the ESU implement procedures to ensure indirect costs are calculated and included with each reimbursement request in accordance with the approved indirect cost rate and applicable federal requirements. Response: Management will review grant reporting procedures and evaluate potential process refinements related to the calculation and inclusion of indirect costs with reimbursement requests, consistent with the approved indirect cost rate where applicable. The previous approach reflected a conservative decision with respect to indirect cost recovery.

2025-006: EXCESS INTEREST EARNINGS NOT RETURNED Program: 84.299 Indian Education – Special Programs for Indian Children 84.184 School Safety National Activities Criteria: Uniform Guidance requires non-federal entities to remit annually any interest earned on federal advance payments in excess of $500 to the U.S. Department of Health and Human Services Payment Management System (PMS). Condition: The ESU earned an estimated $3,280 in interest on 84.299 Indian Education – Special Programs for Indian Children funds and $5,137 in interest on 84.184 School Safety National Activities funds during the year. Amounts in excess of $500 were not remitted to the PMS, as required. Repeat Finding: No Questioned Costs: Questioned costs total approximately $7,917, representing interest earned on federal advance payments in excess of the $500 amount permitted to be retained annually under Uniform Guidance. Of this amount, approximately $2,780 relates to ALN 84.299 (Indian Education – Special Programs for Indian Children), calculated as $3,280 of interest earned less the $500 allowable retention. The remaining $4,637 relates to ALN 84.184 (School Safety National Activities) calculated as $5,137 of interest earned less the $500 allowable retention. These amounts represent federal funds that should have been remitted through PMS. Context: During our testing of cash management procedures for major programs, we reviewed the calculation and treatment of interest earned on federal advance payments. The ESU maintains federal funds in interest-bearing accounts; however, procedures were not in place to calculate and remit excess interest annually. Based on available records and allocation methodology, management estimated total interest earned during the year attributable to ALNs 84.299 and 84.184 as $3,280 and $5,137, respectively. No remittance of excess interest to PMS had been made as of year-end. Cause: The ESU did not have procedures in place to monitor interest earned on federal funds and ensure excess amounts were returned timely. Potential Effect: Failure to remit excess interest earnings results in noncompliance with federal cash management requirements and may require repayment and corrective action. Recommendation: We recommend that the ESU establish procedures to track interest earned on federal funds and remit amounts in excess of $500 annually in accordance with Uniform Guidance. Response: Management will review procedures related to monitoring interest earned on federal funds and consider whether additional steps may be helpful to track amounts relative to allowable limits under Uniform Guidance. Management notes that the excess interest identified was returned in accordance with federal requirements.