Finding 2022-004 Federal Agency: U.S. Department of Education Federal Program: Elementary and Secondary School Emergency Relief (ESSER) Assistance Listing Number: 84.425U Award Period: 09/01/2021 - 08/31/2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Reporting Criteria: The School?s procedures for reporting expenditures should include controls to ensure reported expenditures are supported by general ledger detail. The objectives of the Education Stabilization Fund are to prevent, prepare for and respond to the COVID-19 pandemic. During fiscal year 2022, the School expended $227,096 in federal funding from the Elementary and Secondary School Emergency Relief (ESSER) fund subprogram awarded by the American Rescue Plan (ARP) Act (ESSER III). Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations and the Washington State Office of Superintendent of Public Instruction (OSPI) require the School to report uses of the ESSER III funds via the online reporting tool provided on the OSPI website. Uses reported were required to match expenditures claimed through the OSPI Electronic Data System (EDS) claim process. Condition: During our testing over reporting of ESSER III award, we noted that the School completed the required reports. However, the School?s controls were not effective to ensure it maintained adequate documentation to support use of funds, as required by federal regulations and the grantor. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining the final report provided to OSPI as of August 31, 2022, and tracing funding uses to general ledger reports provided by the School. The School was not able to provide general ledger detail to support all of the expenditures reported. Cause: The School maintained a process for collecting and reporting of ESSER III expenditures that did not allow for retaining detailed reports that documented use of funds reported through the OSPI portal, as the expenditures were tracked on a cumulative basis throughout the fiscal year. While the School did timely file the required reports during the fiscal year ending 2022, they did not maintain detailed records that supported each report submission at the specific point in time each report was submitted. Effect: The School did not comply with OSPI reporting requirements for use of ESSER III funds. By not keeping general ledger reports that support point-in-time claims for reimbursement, the School cannot demonstrate compliance with OSPI?s documentation requirements to support costs charged to federal programs. In addition, it cannot assure the federal grantor that payroll costs charged to the ESSER III award were accurate or valid. The School provided sufficient documentation that demonstrated the grant reporting period was open beyond the fiscal year-end and that the next claim would correct the reporting categories. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School review reporting requirements of federal awards and establish controls to ensure detailed documentation is retained that supports completed reports.
Finding 2022-003 Federal Agency: U.S. Department of Education Federal Program: Elementary and Secondary School Emergency Relief (ESSER) Assistance Listing Number: 84.425U Award Period: 09/01/2021 - 08/31/2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Allowable Costs and Cost Principles Criteria: The School?s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls to ensure expenditures are charged to proper programs and allocated in accordance with the federal grant requirements. The objectives of the Education Stabilization Fund are to prevent, prepare for, and respond to the COVID-19 pandemic. During fiscal year 2022, the School expended $227,096 in federal funding from the Elementary and Secondary School Emergency Relief (ESSER) fund subprogram awarded by the American Rescue Plan (ARP) Act (ESSER III). Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations and the Washington State Office of Superintendent of Public Instruction (OSPI) require the School to have adequate time-and-effort documentation to support all payroll costs charged to the ESSER III award. Depending on the number and the types of activities employees perform, time-and-effort documentation can be a semi-annual certification or monthly personnel activity reports, such as a detailed timesheet. Condition: The School?s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. The School did not have time and effort documentation for a portion of time charged to the ESSER III award for 10 employees. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining payroll charges for all employees for the months of September 2021, March 2022, and August 2022. Attestations on time-and-effort reports provided for all employees were dated January 2023. Cause: While the School had a method to track allowable payroll costs charged to the program, it did not follow its written policy and procedure regarding the collection of time-and-effort documentation. Effect: By not keeping proper time-and-effort records, the School cannot demonstrate compliance with OSPI?s documentation requirements to support payroll costs charged to federal programs. In addition, it cannot assure the federal grantor that payroll costs charged to the ESSER III award were accurate or valid. The School provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School follow its own documented controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant.
Finding 2022-001 Federal Agency: U.S. Department of Education Federal Program: Charter School Program Subgrant Assistance Listing Number: 84.282 Award Period: 03/13/2020 - 09/30/2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Procurement and Suspension and Debarment Criteria: The School?s procedures for processing expenditures should include controls to ensure that vendors paid with federal funds are not suspended or debarred from doing business with the federal government. Suspension and debarment Federal requirements prohibit grant recipients from contracting with parties suspended or debarred from doing business with the federal government. Whenever the School contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the vendor is not suspended or debarred. The School can verify a vendor?s status by obtaining written certification from the vendors, or it can insert a clause into the contract stating the vendor is not suspended or debarred. Alternatively, the School check the U.S. General Services Administration?s Excluded Parties List System (EPLS). The School must meet one of these requirements before awarding the contract or making purchases. They are required to keep documentation demonstrating compliance with this federal requirement. Condition: The School did not have effective internal controls for ensuring it complied with federal procurement requirements and its own policy for verifying the suspension and debarment status of vendors for purchases exceeding $25,000. The School did business with two vendors without verifying they were not suspended or debarred. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining purchases from vendors over $25,000 from the year under audit. Cause: Management and contracted accounting staff were not aware of the School?s policy to verify vendors are not suspended or debarred from doing business with the federal government before entering into purchase agreements. Effect: The School did not obtain written certifications or check the EPLS to verify that vendors were not suspended or debarred before contracting or purchasing. The School paid these contractors $87,256 during fiscal year 2022. Without following its written internal controls, the School cannot ensure that vendors paid with federal funds are eligible to participate in federal programs. Any program funds the School used to pay vendors that were found to be suspended or debarred would be unallowable, and the federal grant could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School strengthen internal controls to ensure that all vendors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred.
Finding 2022-002 Federal Agency: U.S. Department of Education Federal Program: Charter School Program Subgrant Assistance Listing Number: 84.282 Award Period: 03/13/2020 - 09/30/2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Allowable Costs/Cost Principles Criteria: The School?s procedures for preparing requests for reimbursement should include controls to prevent duplication of expenditures when submitting requests to multiple granting agencies. The Uniform Guidance requires that all recipients of federal awards develop an internal control framework in line with the framework proposed by the Committee of Sponsoring Organizations (COSO). The five elements of the COSO framework are the control environment, risk assessment, control activities, information and communication, and monitoring. Each one of these common findings could be prevented by developing control activities which would address the risks of noncompliance identified by management. Condition: In our testing of 33 general disbursements we found one invoice that was initially claimed for reimbursement from a non-major federal program (USAC E-rate). Due to a miscommunication, the invoice was also included in an invoice for reimbursement from the Charter School Program subgrant. Both granting agencies reimbursed this cost. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining 43 general disbursements from the year under audit. Of those reviewed, 33 were claims for reimbursement from the Charter School Program grant. One transaction tested was found to have been claimed against two federal programs, one major program and one non-major program. Cause: As a result of a miscommunication, the contracted accounting staff did not anticipate the invoice to be reimbursed by USAC E-rate. The contracted accounting staff manages the preparation of the claims for reimbursement for all grants on behalf of the School. These are not reviewed by management prior to submission to the granting agency. The invoice was subsequently submitted for reimbursement from the CSP grant. Effect: The School was reimbursed the cost of the invoice from two separate federal award funding agencies. Without review and approval of federal grant reimbursement requests by a second employee, it is possible that reimbursement requests may be in an incorrect amount, incorrectly timed, submitted for expenditures not qualifying under the grant agreement, or submitted to multiple funding sources in error. This could result in an overstatement of grant revenue. The School was able to provide documentation for other allowable costs that have not previously been reimbursed by any other federal or state agency. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School correct the April 2022 claim to remove the duplicated invoice and provide documentation to the funder for other allowable costs.
Finding 2022-004 Federal Agency: U.S. Department of Education Federal Program: Elementary and Secondary School Emergency Relief (ESSER) Assistance Listing Number: 84.425U Award Period: 09/01/2021 - 08/31/2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Reporting Criteria: The School?s procedures for reporting expenditures should include controls to ensure reported expenditures are supported by general ledger detail. The objectives of the Education Stabilization Fund are to prevent, prepare for and respond to the COVID-19 pandemic. During fiscal year 2022, the School expended $227,096 in federal funding from the Elementary and Secondary School Emergency Relief (ESSER) fund subprogram awarded by the American Rescue Plan (ARP) Act (ESSER III). Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations and the Washington State Office of Superintendent of Public Instruction (OSPI) require the School to report uses of the ESSER III funds via the online reporting tool provided on the OSPI website. Uses reported were required to match expenditures claimed through the OSPI Electronic Data System (EDS) claim process. Condition: During our testing over reporting of ESSER III award, we noted that the School completed the required reports. However, the School?s controls were not effective to ensure it maintained adequate documentation to support use of funds, as required by federal regulations and the grantor. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining the final report provided to OSPI as of August 31, 2022, and tracing funding uses to general ledger reports provided by the School. The School was not able to provide general ledger detail to support all of the expenditures reported. Cause: The School maintained a process for collecting and reporting of ESSER III expenditures that did not allow for retaining detailed reports that documented use of funds reported through the OSPI portal, as the expenditures were tracked on a cumulative basis throughout the fiscal year. While the School did timely file the required reports during the fiscal year ending 2022, they did not maintain detailed records that supported each report submission at the specific point in time each report was submitted. Effect: The School did not comply with OSPI reporting requirements for use of ESSER III funds. By not keeping general ledger reports that support point-in-time claims for reimbursement, the School cannot demonstrate compliance with OSPI?s documentation requirements to support costs charged to federal programs. In addition, it cannot assure the federal grantor that payroll costs charged to the ESSER III award were accurate or valid. The School provided sufficient documentation that demonstrated the grant reporting period was open beyond the fiscal year-end and that the next claim would correct the reporting categories. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School review reporting requirements of federal awards and establish controls to ensure detailed documentation is retained that supports completed reports.
Finding 2022-003 Federal Agency: U.S. Department of Education Federal Program: Elementary and Secondary School Emergency Relief (ESSER) Assistance Listing Number: 84.425U Award Period: 09/01/2021 - 08/31/2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Allowable Costs and Cost Principles Criteria: The School?s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls to ensure expenditures are charged to proper programs and allocated in accordance with the federal grant requirements. The objectives of the Education Stabilization Fund are to prevent, prepare for, and respond to the COVID-19 pandemic. During fiscal year 2022, the School expended $227,096 in federal funding from the Elementary and Secondary School Emergency Relief (ESSER) fund subprogram awarded by the American Rescue Plan (ARP) Act (ESSER III). Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations and the Washington State Office of Superintendent of Public Instruction (OSPI) require the School to have adequate time-and-effort documentation to support all payroll costs charged to the ESSER III award. Depending on the number and the types of activities employees perform, time-and-effort documentation can be a semi-annual certification or monthly personnel activity reports, such as a detailed timesheet. Condition: The School?s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. The School did not have time and effort documentation for a portion of time charged to the ESSER III award for 10 employees. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining payroll charges for all employees for the months of September 2021, March 2022, and August 2022. Attestations on time-and-effort reports provided for all employees were dated January 2023. Cause: While the School had a method to track allowable payroll costs charged to the program, it did not follow its written policy and procedure regarding the collection of time-and-effort documentation. Effect: By not keeping proper time-and-effort records, the School cannot demonstrate compliance with OSPI?s documentation requirements to support payroll costs charged to federal programs. In addition, it cannot assure the federal grantor that payroll costs charged to the ESSER III award were accurate or valid. The School provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School follow its own documented controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant.
Finding 2022-001 Federal Agency: U.S. Department of Education Federal Program: Charter School Program Subgrant Assistance Listing Number: 84.282 Award Period: 03/13/2020 - 09/30/2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Procurement and Suspension and Debarment Criteria: The School?s procedures for processing expenditures should include controls to ensure that vendors paid with federal funds are not suspended or debarred from doing business with the federal government. Suspension and debarment Federal requirements prohibit grant recipients from contracting with parties suspended or debarred from doing business with the federal government. Whenever the School contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the vendor is not suspended or debarred. The School can verify a vendor?s status by obtaining written certification from the vendors, or it can insert a clause into the contract stating the vendor is not suspended or debarred. Alternatively, the School check the U.S. General Services Administration?s Excluded Parties List System (EPLS). The School must meet one of these requirements before awarding the contract or making purchases. They are required to keep documentation demonstrating compliance with this federal requirement. Condition: The School did not have effective internal controls for ensuring it complied with federal procurement requirements and its own policy for verifying the suspension and debarment status of vendors for purchases exceeding $25,000. The School did business with two vendors without verifying they were not suspended or debarred. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining purchases from vendors over $25,000 from the year under audit. Cause: Management and contracted accounting staff were not aware of the School?s policy to verify vendors are not suspended or debarred from doing business with the federal government before entering into purchase agreements. Effect: The School did not obtain written certifications or check the EPLS to verify that vendors were not suspended or debarred before contracting or purchasing. The School paid these contractors $87,256 during fiscal year 2022. Without following its written internal controls, the School cannot ensure that vendors paid with federal funds are eligible to participate in federal programs. Any program funds the School used to pay vendors that were found to be suspended or debarred would be unallowable, and the federal grant could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School strengthen internal controls to ensure that all vendors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred.
Finding 2022-002 Federal Agency: U.S. Department of Education Federal Program: Charter School Program Subgrant Assistance Listing Number: 84.282 Award Period: 03/13/2020 - 09/30/2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Allowable Costs/Cost Principles Criteria: The School?s procedures for preparing requests for reimbursement should include controls to prevent duplication of expenditures when submitting requests to multiple granting agencies. The Uniform Guidance requires that all recipients of federal awards develop an internal control framework in line with the framework proposed by the Committee of Sponsoring Organizations (COSO). The five elements of the COSO framework are the control environment, risk assessment, control activities, information and communication, and monitoring. Each one of these common findings could be prevented by developing control activities which would address the risks of noncompliance identified by management. Condition: In our testing of 33 general disbursements we found one invoice that was initially claimed for reimbursement from a non-major federal program (USAC E-rate). Due to a miscommunication, the invoice was also included in an invoice for reimbursement from the Charter School Program subgrant. Both granting agencies reimbursed this cost. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining 43 general disbursements from the year under audit. Of those reviewed, 33 were claims for reimbursement from the Charter School Program grant. One transaction tested was found to have been claimed against two federal programs, one major program and one non-major program. Cause: As a result of a miscommunication, the contracted accounting staff did not anticipate the invoice to be reimbursed by USAC E-rate. The contracted accounting staff manages the preparation of the claims for reimbursement for all grants on behalf of the School. These are not reviewed by management prior to submission to the granting agency. The invoice was subsequently submitted for reimbursement from the CSP grant. Effect: The School was reimbursed the cost of the invoice from two separate federal award funding agencies. Without review and approval of federal grant reimbursement requests by a second employee, it is possible that reimbursement requests may be in an incorrect amount, incorrectly timed, submitted for expenditures not qualifying under the grant agreement, or submitted to multiple funding sources in error. This could result in an overstatement of grant revenue. The School was able to provide documentation for other allowable costs that have not previously been reimbursed by any other federal or state agency. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School correct the April 2022 claim to remove the duplicated invoice and provide documentation to the funder for other allowable costs.