Audit 394167

2025-001 Improve Oversight Over Period of Performance of Federal Awards (Material Weakness) Federal Agency: Department of Education Cluster/Program: Special Education Cluster AL Number(s): 84.027/84.173 Award Year: 2025 Compliance Requirement: Period of Performance Type of Finding Material Noncompliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Management of the Town is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context During our review of 40 of the 281 invoices charged to the special education grant, we noted one instance where an invoice for special education transportation was charged to the 2025 grant year, however, a portion of these services occurred prior to the period of performance of the 2025 grant. This was not a statistically valid sample. Cause The Town has not established adequate procedures to ensure expenditures are expended within the authorized period of performance. Effect or Potential Effect Due to the weakness in internal control noted above, there are known and questioned costs reported related to contracted services incurred prior to the period of performance and charged to the grant, which could impact future grant funding. Questioned Costs The questioned costs associated with the portion of the invoice that occurred outside the authorized period of performance is $86,611. Recommendation The Town should implement controls to ensure that no costs are charged to a grant prior to the authorized period of performance. Views of Responsible Official Management agrees with the finding. Planned Corrective Action Management’s corrective action plan is included at the end of this report after the schedule of prior year findings.