Audit 404752

EXCEPTIONAL CHILDREN HAVE OPPORTUNITIES 07-016-1710-61 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2025 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER:14 2025 - 004 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Education Stabilization Fund 4. Project No.: 24-4998-CO, 25-4998-ES 5. AL No.: 84.425 6. Passed Through: Illinois State Board of Education 7. Federal Agency: U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Under the Uniform Guidance, costs charged to Federal awards must be necessary, reasonable, allocable, adequately documented, and consistently treated. Additionally, expenditures included in reimbursement requests must represent valid, allowable program costs that have been incurred and remain supported by the joint agreement's accounting records. Recipients are required to maintain effective internal controls over Federal awards in accordance with the Uniform Guidance. 9. Condition During testing of expenditures claimed under the Education Stabilization Fund program we identified $41,157 of expenditures that were included in a reimbursement request were not supported by allowable program expenditures. Subsequent to the reimbursement request and receipt of grant funds, the checks issued as payment to vendors were voided as the vendors did not provide goods or services. These expenditures were determined to be unsupported and resulted in questioned costs. 10. Questioned Costs We identified $41,157 of known questioned costs due to checks and underlying expenditures being charged to the program that were voided in a subsequent period. Projected questioned costs were not extrapolated as we were able to perform additional procedures to quantify the total value of expenditures claimed under the award that were aligned with checks that were voided due to vendors not providing goods or services. 11. Context We initially sampled 40 transactions charged to the award, of which one of these samples detected an unallowable cost claimed for the program as the $5,000 check issued to the vendor for expenditures claimed was for goods or services that were anticipated to be received. After several months ECHO personnel determined that the check should not be issued to the vendor and the check was voided. Based on this deviation in our sample we expanded our procedures to determine if additional expenditures claimed and subsequently voided and were able to identify an additional $36,157 of unallowable costs to the program. Our sample was not statistically valid. 12. Effect The joint agreement received Federal reimbursement for an expenditure that was not ultimately incurred and supported as an allowable program cost and resulted in $41,157 of questioned costs. 13. Cause Management did not maintain effective controls to ensure that costs claimed under the award were for allowable costs that were actually incurred. Specifically, there was no review process to ensure that expenditures included in reimbursement claims were for supported and allowable expenditures. 14. Recommendation We recommend that ECHO implement procedures to ensure checks are not created for payment to vendors in anticipation of goods or services being provided and that checks only be created once all appropriate supporting documentation has been received and approval for payment has been authorized by appropriate ECHO personnel. We also recommend that all requests for voiding checks be processed through appropriate reviews and documented approvals by someone outside of the check issuance process to ensure proper segregation of duties are present. These additional controls could aid in the prevention, detection and correction of potential errors in financial records or potential misappropriation of assets. 15. Management's response See corrective action plan

EXCEPTIONAL CHILDREN HAVE OPPORTUNITIES 07-016-1710-61 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2025 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER:14 2025 - 005 2. THIS FINDING IS: 3. Federal Program Name and Year: Education Stabilization Fund 4. Project No.: 24-4998-CO, 25-4998-ES 6. Passed Through: Illinois State Board of Education 7. Federal Agency: U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) The Uniform Guidance requires non-Federal entities to maintain property records for equipment acquired with Federal funds. Property records must include, at a minimum, a description of the property, serial number or other identification number, source of funding, title holder, acquisition date, cost, percentage of Federal participation, location, use and condition, and ultimate disposition data. 9. Condition ECHO did not maintain a listing of capital equipment acquired with Federal funds. During testing of equipment purchased under the Education Stabilization Program, we noted that management was unable to provide a complete inventory identifying equipment purchased with Federal awards or documenting the information required by the Uniform Guidance. As a result, ECHO could not demonstrate that equipment acquired with Federal funds was properly tracked and monitored. 10. Questioned Costs None noted 11. Context This condition was identified through our testing of equipment and capital asset records related to expenditures charged to the federal award. No comprehensive inventory of federally funded equipment was maintained. 12. Effect The absence of a complete inventory of federally funded equipment increases the risk that equipment may be lost, stolen, misused, improperly disposed of, or otherwise not managed in accordance with Federal requirements. Additionally, ECHO is unable to demonstrate compliance with the equipment management requirements of Uniform Guidance. 13. Cause Management has not established procedures to identify, record, and track equipment purchased with Federal funds. Responsibility for maintaining federally required property records has not been assigned, and monitoring controls over compliance with Federal equipment management requirements have not been implemented. 14. Recommendation We recommend that management develop and implement procedures to identify and track all equipment acquired with Federal funds. The joint agreement should establish and maintain a complete inventory of federally funded equipment containing all information required by the Uniform Guidance, perform periodic physical inventories, reconcile inventory records to accounting records, and assign responsibility for ongoing maintenance of equipment records. 15. Management's response See corrective action plan.