SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Prosser School District No. 116 September 1, 2024 through August 31, 2025 2025-002 The District did not have adequate internal controls and did not comply with federal time-and-effort requirements. Assistance Listing Number and Title: 84.011 Migrant Education State Grant Program Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: S011A240048 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The objective of the Migrant Education State Grant Program is to support high quality and comprehensive educational programs for migratory children to help reduce education disruptions and ensure that migratory children receive full and appropriate opportunities to meet the same challenging state student academic content and achievement standards that all children are expected to meet. In fiscal year 2025, the District spent $811,844 in federal funds through the Migrant Education State Grant Program. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The District is responsible for ensuring it supports all payroll costs it charges to the program with adequate time-and-effort documentation, as required by federal regulations and the awarding agency. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report, such as a detailed time sheet. Time-and-effort documentation must also be signed and dated after employees complete the work. Description of Condition The District’s internal controls were ineffective for ensuring it supported salaries and benefits it charged to the program with appropriate time-and-effort documentation, as federal regulations and OSPI require. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District had turnover in key positions responsible for managing the program. As a result, the current staff were unable to locate supporting documentation for time-and-effort. Effect of Condition Using a nonstatistical sample, we found three out of 10 employees tested, whose salaries and benefits totaled $85,477, were not supported by time-and-effort documentation. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the awarding agency’s documentation requirements to support costs charged to federal programs. Further, the District cannot assure federal grantors that payroll costs it charged to the program were accurate and valid. During the audit, the District obtained and provided the signed time-and-effort records to support the payroll costs it charged to the program; therefore, we are not questioning these costs. Recommendation We recommend the District establish and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining signed time-and-effort documentation timely. District’s Response The District acknowledges the finding and appreciates the guidance provided by the Washington State Auditor’s Office regarding internal controls and compliance requirements associated with the Migrant Education State Grant Program. The District experienced turnover in key positions responsible for oversight and administration of the program during the audit period. As a result, the District was unable to provide sufficient supporting documentation related to employee tuition expenditures and timely time-and-effort certifications for certain employees charged to the program. Since the audit review, the District has taken corrective actions to strengthen internal controls and ensure future compliance with federal and OSPI requirements. The District has implemented procedures to improve document retention, monitoring, and review processes related to federal grant expenditures and payroll documentation. Additionally, the District has reinforced expectations regarding timely completion and retention of required time-and-effort documentation for all applicable staff. Further, the District will provide additional training to staff responsible for administering and overseeing federal programs to ensure understanding of applicable federal regulations, allowable cost requirements, and documentation standards. The District is committed to maintaining strong stewardship of federal funds and will continue working to improve internal controls and compliance procedures moving forward. Auditor’s Remarks We appreciate the steps the District is taking to resolve this issue. We will follow up on the recommendation during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs. Office of Superintendent of Public Instruction to Bulletin 039-24, Time and Effort (T&E) Reporting, establishes requirements for documenting time-and-effort, including fixed schedule systems.