2025-002 The District did not have adequate internal controls and did not comply with time-and-effort requirements. Assistance Listing Number and Title: 84.010 – Title I Grants to Local Educational Agencies 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: GT-03188, GT-03331, GT-03681, GT-03776, GT-03993, GT-04029, GT-04089, GT-04368, GT-04378 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. During the 2024-25 school year, the District spent $4,820,735 in Title I program funds. Federal regulations require recipients to establish, document and maintain effectiveNinternal 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 all 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 District staff were aware of the federal time-and-effort certification requirements but overlooked the requirements in some cases and did not ensure to retain timeand- effort documentation. Effect of Condition Using a statistical sample, we found the District did not obtain adequate time-andeffort documentation for three out of 28 employees and substitutes (10.7%) tested whose payroll costs totaling $101,812 was charged to the program. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the awarding agency’s documentation requirements to supportMcosts charged to the program. 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 implement and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining signed and dated timeand- effort documentation timely. District’s Response The District has revised and strengthened its internal control procedures related to time-and-effort documentation for salaries and benefits charged to the Title I program. Corrective actions were implemented to improve the identification, monitoring, collection, and retention of required certifications and personnel activity documentation in accordance with federal and OSPI requirements. To address the conditions identified, the District implemented the following: 1. Revised procedures to identify all employees and substitutes requiring semiannual certifications or personnel activity reporting, to include substitutes and subsequent corrections, at the beginning of each reporting cycle. 2. Augmentation of the centralized tracking process to monitor issuance, collection, review, and retention of required time-and-effort documentation. 3. Enhancement of formal certification follow-up procedures, including automated reminders, documented follow-up communications, and escalation procedures for outstanding certifications prior to reporting period closeout. 4. Additional training provided to applicable administrators, payroll personnel, and program staff regarding federal time-and-effort requirements, documentation standards, and retention expectations. 5. Implementation of periodic internal compliance reviews to verify supporting documentation is maintained consistently and in accordance with federal and state requirements. These corrective actions are intended to strengthen internal controls over payroll expenditures charged to federal programs and ensure timely compliance with federal and OSPI time-and-effort documentation requirements going forward. Auditor’s Remarks We appreciate the steps the District is taking to resolve this issue. We will review the corrective action taken 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.