Audit 397582

2025-004 Impact Aid Application Controls CFDA Title: Impact Aid CFDA Number: 84.041 Federal Award Number: N/A Federal Agency: Department of Education Pass-through Entity: N/A Condition: The District does not have an internal control system in place to ensure that supporting documentation is maintained to support the Impact Aid Applications for the elementary and high school. Context: We requested the supporting documentation to test the compliance of reported students counts on the elementary and high school impact aid applications, but the District had a difficult time providing the supporting documentation and/or could not provide it at all. Criteria: (1) 2 CFR section 200.303 requires that the District establish and maintain an effective internal control system over the federal award to provide reasonable assurance that the District is managing the federal awards in compliance with federal statutes, regulations and the terms and conditions of the federal award. (2) Application for Impact Aid - Section 7003 (OMB No. 1810-0687) - Each year an LEA must submit this application, which provides the following information: counts of federally connected children in various categories, membership and average daily attendance data, and information on expenditures for children with disabilities. This form is in the Impact Aid Grant System, which does not have a public link, therefore school districts will need to provide a copy to the auditor. Effect: The District risk of noncompliance with federal programs increases if documentation is not maintained to support those compliance requirements. In addition, we found variances in both total enrollment reported, as well as children living on Indian lands. There was no support for the children with disabilities reported on the applications. Cause: The District did not establish and maintain an adequate internal control system ensure that supporting documentation is maintained to support the number reported on the application. Recommendation: We recommend that the District review its internal control systems over its Impact Aid application, and ensure that the document management systems are adequate to ensure appropriate filing of supporting documentation to the applications are maintained so that information can be found in future years.

2025-005 Wage Rate Compliance CFDA Title: ESSER III and Impact Aid CFDA Number: 84.425; 84.041 Federal Award Number: 2021 and 2025 Federal Agency: U.S. Department of Education Pass-through Entity: Montana Office of Public Instruction; Direct Condition: During our compliance testing of ESSER III and Impact Aid construction expenditures, we identified that the contracts did not include required prevailing wage provisions and District did not obtain supporting documentation (certified payrolls) to demonstrate compliance with wage rate requirements. Context: During the testing of claims for the ESSER III and Impact Aid major programs related to construction, we noted claims in which there should be contracts in place and that the wage rate requirements would apply. Criteria: All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by Federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL). Non-federal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations. This includes a requirement for the contractor or subcontractor to submit to the non-Federal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). Effect: The District is not incompliance with the Federal Wage Rate Requirements for the HVAC and Controls Upgrade as the contracts did not include the required verbiage and the District did not require weekly certified payrolls. Cause: The District Clerk/Business Manager was new to the District and was not aware of the federal requirements for using federal grant monies for construction purposes. Recommendation: The District should implement internal controls to determine the federal compliance requirements of all federal funds received. In addition, procedures should be implemented to ensure any federal funds received in which the Wage Rate Requirement is required the following are implemented: 1. any construction vendor is by contract, and that contract includes the Prevailing Wage clauses for the contractors and subcontractors. 2. the weekly certified payrolls are submitted to the District.