Audit 403034

Condition: During audit fieldwork, our testing resulted in a restatement of fund balance due to differences between the third party capital asset report and the prior year financial statements. Criteria: A good system of internal controls would provide for accurate recording and reporting of capital assets on a regular basis in order to provide for accurate financial reporting. Cause: A large adjustment to capital assets was required in order to accurately present the District’s financial statements. Effect: A material adjustment to the District’s beginning fund balance was required to properly state capital asset balances. Recommendation: We recommend the District implement effective internal controls in order to provide an accurate assessment of reporting requirements. This implementation of improved controls would result in the appropriate recognition for financial reporting requirements. Corrective Action Plan: The District will implement internal controls to properly record capital asset balances on a timely basis prior to audit fieldwork.

Condition: During our review of the Wisconsin Medicaid School-Based Services Program, the School District was unable to provide adequate supporting documentation for quarterly payroll costs reported to Medicaid. Additionally, the District could not provide a complete and reliable population of payroll transactions attributable to the Medicaid program to support payroll sampling procedures. Criteria: Wisconsin Medicaid School-Based Services claiming requirements require school districts to maintain complete, accurate, and auditable records to support payroll costs claimed for Medicaid reimbursement. This includes maintaining documentation sufficient to support quarterly payroll reports and providing a defined and accurate population for audit sampling purposes, in accordance with Medicaid record retention and documentation standards. Cause: The District did not have adequate internal controls or recordkeeping procedures in place to ensure payroll records attributable to Medicaid activities were properly accumulated, retained, and readily available for reporting and audit purposes. Management oversight over payroll reporting and documentation related to the Medicaid program was insufficient. Effect: As supporting documentation and a complete payroll population were not available, we were unable to verify the accuracy and allowability of payroll costs reported to the Medicaid program. As a result, there is an increased risk that unallowable or unsupported payroll costs may have been claimed, potentially leading to questioned costs or repayment to the Wisconsin Medicaid program. Questioned Costs: $4,488,717 Recommendation: We recommend the School District strengthen its internal controls over payroll reporting for the Medicaid School-Based Services Program by: establishing and maintaining detailed supporting documentation for all payroll costs claimed; developing procedures to ensure a complete and auditable payroll population can be generated for each reporting period; and providing training to staff responsible for Medicaid payroll reporting and documentation. Management should implement corrective actions to ensure future Medicaid payroll claims are fully supported and compliant with program requirements. Corrective Action Plan: The District acknowledges the finding and will review its procedures over Medicaid payroll.

Condition: Purchases did not have an approval within the system before the purchase was made. Criteria: Invoices being paid and submitted for expense reimbursement through the IDEA grant need to be approved by an appropriate District individual. Cause: Expenditures were made without proper approval. Effect: Expenditures may not have been appropriately approved before being made. Recommendation: We recommend the District review its procedures for approval of purchases before purchases are made. Corrective Action Plan: The District acknowledges the finding and will review its procedures over approval of purchases before they are made.

Condition: An employee was identified as being paid more per paycheck than their contract approved of. This was related to an error from the payroll specialist previously employed by the District. Criteria: Teachers being paid under the Title I grant should have their pay rates approved and should be paid in accordance with those pay rates. Cause: Employee was paid in excess of their contracted rate. Effect: Title I funds may have been used to pay amounts which were not allowable as they were not properly approved. Questioned Costs: $611 Recommendation: We recommend the District review its procedures for verifying pay rates input into the system are correct so that employees cannot be paid more than their contracted rate. Corrective Action Plan: The District acknowledges the finding and will review its procedures over payroll pay rates.