Audit 402951

2025-009: ALLOWABLE COSTS/COST PRINCIPLES Program: Education Stabilization Fund Federal Assistance Listing Number: 84.425U Federal Agency: U.S. Department of Education Pass-Through Agency: Arizona Department of Education Grantor Number: 21FESIII-111427-01A Questioned Costs: $909.10 Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Compliance Requirement: B. Allowable Costs/Cost Principles Condition: During testing of payroll disbursements charged to the Education Stabilization Fund (ESSER III) program, we noted that for two of 9 transactions tested, the District was unable to provide documentation demonstrating that extra duty stipends were properly approved and allowable under the grant. The total amount associated with these transactions was $909.10. Criteria or Specific Requirement: In accordance with 2 CFR Part 200 Subpart E, costs charged to federal awards must be necessary, reasonable, allocable, and adequately documented. Payroll costs must be supported by appropriate documentation demonstrating that the costs were properly authorized and allowable under the terms and conditions of the federal program. Cause: The deficiency was due to improper grant management, including insufficient procedures to ensure payroll expenditures charged to federal programs are properly reviewed, approved, and supported with adequate documentation. Effect: The District was unable to demonstrate that certain payroll expenditures were allowable under the ESSER III program. This increases the risk that unallowable costs may be charged to the federal program and may result in potential disallowance of funds. Repeat Finding: No. Recommendation: The District should implement procedures to ensure all payroll costs charged to federal programs are properly approved, supported, and reviewed prior to processing. Documentation supporting approval and allowability should be maintained and available for audit. We also recommend grant management oversight is properly implemented to ensure budget capacity and the available grant funding is spent during the allowable period. Views of Responsible Officials: The District’s corrective action plan, presented in a separate document, includes the views and planned corrective actions of its responsible officials. We did not audit these responses and, accordingly, express no opinion or assurance on them.