Audit 405663

Finding: The District does not have a process to document special education high cost claims submitted to the Iowa Department of Education for reimbursement. Criteria: A proper internal control structure would ensure claims submitted for reimbursement were supported by a documentation and filing system that the District could provide to support the reimbursement request regardless of the person who prepared the information. Condition: The District was unable to provide documentation of the high cost claims submitted to the state for reimbursement. Cause: The District has had significant turnover in the Business Office and in the Special Education Department. Effect: The District does not have information to support claims submitted. Questioned costs: $524,494, refer to Finding 2024-014. Context: The District expended $524,494 for high-cost claims which is 100% of the reimbursement from the state. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District establish procedures to ensure expenditure reports and submissions for programs are documented and filed to be retrieved by District personnel even if the preparer is not available.

Finding: The District was unable to provide expenditure information for the program. Criteria: The May 2024 Office of Management and Budget Compliance Supplement states the following for Compliance Requirements – Allowable Costs and Activities-states, “Be adequately documented.” Condition: The District was unable to provide documentation of the high cost claims submitted to the state for reimbursement. Therefore, there was no information to test for allowable activities and allowable costs. Cause: The District has had significant turnover in the Business Office and in the Special Education Department. Effect: Unallowable activities or costs may be charged to the program. Questioned costs: $524,494, refer to Finding 2024-011. Context: The District expended $524,494 for high-cost claims which is 100% of the reimbursement from the state. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District establish procedures to ensure expenditure reports and submissions for programs are documented and filed to be retrieved by District personnel even if the preparer is not available.

Finding: The District does not have a process to identify federal capital assets or ensure program requirements for capital purchases are met. Criteria: The May 2024 Office of Management and Budget Compliance Supplement states the following for Compliance Requirements – Equipment and Real Property Management- “..prior approval by the pass-through entity to purchase real property and perform construction for improvements to land, buildings or equipment that meet the overall purpose of the program.” “any purchases with ESF Funds in this category are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Part 3, Section F, “Equipment/Real Property Management” Condition: The District did not identify two vehicle purchases with ESF funds exceeding the capitalization threshold of $5,000 for capitalization in District records. The District did not obtain the required prior approval from the state of Iowa for the vehicle purchases. In addition, the District does not have an inventory process to ensure federal assets are properly identified and documented in accordance with the Office of Management and Budget Compliance Supplement. Cause: The District has had significant turnover in the Business Office. Effect: Federal capital assets are not properly identified and capitalized. Questioned costs: $74,217 Context: The District purchased two vehicles for $74,217. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District implement a process to ensure federal expenditures are compared to program requirements such as pre-approval. We recommend the District implement a process to identify and document all capital assets purchased with federal program funding in compliance with the Office of Management and Budget.

Finding: The District does not have a process for report preparation and review. Criteria: A proper internal control structure would include segregation of duties and would ensure that reports are reviewed by an individual other than the preparer prior to submission. Condition: In the prior year, the District’s finding 2023-004 over the ESF program stated “the reports were prepared and submitted by the same employee and no independent review took place prior to submission.” In the current year, the required quarterly reports were submitted; however, there is no documentation of the preparer and no documentation of a review being performed. The Special Education-Grants to States program submitted to the Grant Wood Area Education Agency did not agree to the expenditures by object from the District’s trial balance. There was no documentation of a review being performed. Cause: The District has had significant turnover in the Business Office. Effect: Reports submitted for the federal program may have errors or be inaccurate. Questioned costs: None Context: The ESF program requires quarterly reimbursement submissions. The Special Education- Grants to States program requires semi-annual and annual reports. Identification as a repeat finding: This is a repeat finding. Recommendation: We recommend the District implement a process whereby financial grant reports are prepared by the program administrator and reviewed by the Business Office prior to submission. The preparation and review process should be formally documented and maintained in a retrievable file system.

Finding: The District charged costs to the ESF Program that are not allowable to the program. Criteria: The May 2024 Office of Management and Budget Compliance Supplement states the following for Compliance Requirements – Allowable Costs and Activities – states “…demonstrate consistent with the purpose of the ESF, which is to prevent, prepare for, and respond to COVID-19.” “Section 313(3) of the CRRSA Act includes “additional” LEA allowable uses of funds under ESSER II, in particular addressing learning loss; preparing schools for reopening; and testing, repairing, and upgrading projects to improve air quality in school buildings…” Condition: The District charged expenditures to the federal program for copier leases, faxing service, tech support service, shipping costs for an undocumented purpose, and financial software.Cause: Journal entries were posted to move expenditures from several accounts to the federal program without considering program requirements or specifically identifying invoices to code to the federal program. Effect: Unallowable costs could be charged to the program. Questioned costs: $241,407 Context: Through the testing of forty-two randomly selected ESF program disbursements that occurred during the fiscal year, we noted twelve instances in which the goods or services purchased did not appear to be allowable activities. The District expended $1,573,182 on the program for fiscal year 2024. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District implement a process to ensure all charges to the program comply with program requirements.

Finding: The District does not have an adequate process to ensure approval and documentation of disbursements charged to the federal program. Criteria: The May 2024 Office of Management and Budget Compliance Supplement states the following for Compliance Requirements – Allowable Costs and Activities –“..Be consistent with the policies and procedures that apply uniformly to both federally financed and other activities of the nonfederal entity…Be adequately documented.” Condition: The following are the conditions: 1) The District does not have a process to ensure that costs are properly approved for the Nutrition program or ESF program or Special Education-Grants to States program. Invoices did not have documentation for approval to pay. 2) The District does not have a process to ensure costs charged to the Nutrition and ESF program are allowable and properly coded. Invoices were not coded to the proper account and were not documented for allowability. Cause: The District is not requiring invoices to be approved by the Department Head prior to payment. The District is not posting to project object codes per the state chart of accounts. Effect: Unallowable or unapproved costs could be charged to the program. Context: For the Nutrition Program, ten instances from a sample of twenty-five randomly selected Nutrition Program disbursements did not have documentation of invoice approval. One of those instances was a meal for a Food Services meeting that was incorrectly coded to the “In District Mileage” account rather than the “Other Employee Incentives” account. For the ESF Program, twenty-five instances from a sample of forty-two randomly selected disbursements did not have documentation of invoice approval. Seventeen disbursements were not coded to the proper object code. For the Special Education-Grants to States Program, eight instances from a random sample of twelve did not have documentation of approval of the invoice. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District implement a process to ensure all charges to the program have documented Department Head approval prior to payment and the charges are posted to the proper account and are allowable to the program.