2025-001 The District did not have adequate internal controls and did not comply with time-and-effort requirements. Assistance Listing Number and Title: 84.027/84.173 – Special Education Cluster 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-02581, GT-HHI25-00082, GT-02581 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2025, the District spent $455,980 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. 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 type 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 The District was aware of time-and-effort requirements, but it did not dedicate the necessary time and resources to ensure it obtained the correct documentation. Effect of Condition The District did not obtain adequate time-and-effort documentation for six employees whose salaries and benefits totaled $398,208 charged to the program. 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. During the audit, the District provided alternative documentation to show the employees worked on the program; therefore, we are not questioning these costs. Recommendation We recommend the District strengthen and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining signed time-and-effort documentation timely. District’s Response Auditor’s Remarks 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 Addendum to Bulletin 039-24, Guidelines for Charging Employee Compensation to Federal Grants establishes requirements for documenting time-and-effort, including fixed schedule systems.