Audit 40907

2022-001 ? Suspension and Debarment - Significant Deficiency Federal Program Information: Funding Agency: Department of Agriculture Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Pass Through Award Number: 21000 Pass Through Entity: State of NM PED Award Year: 2022 Condition: Both samples selected for testing vendor eligibility on sam.gov, we noted the District did not have documentation to support that a review was taken place on vendor eligibility. Per 2 CFR section 200.303 ? Internal Controls ? The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned costs: No questioned costs identified. Effect: If a vendor has been disbarred from receiving Federal funds, the Organization may be liable to pay for the amount and not be reimbursed. Cause: The District did not follow proper Federal policies related to verification of vendors from the excluded parties list system. Auditors? Recommendation: The auditor recommends that the District verify that all vendors are not listed on the excluded parties list system by performing a search on sam.gov and maintaining the results of such search in the vendor?s file. Views of Responsible Officials of Auditee: During the 2021-22 audit, the documentation to support vendor eligibility was not in the vendor?s paperwork for verification. The current process for vendor verification requires a New Vendor Form, a current W-9 Form, Sam.Gov verification of the vendor?s registration status, and an IRS TIN Match, a requirement implemented in FY 2021-22. All of the information obtained is then filed in a vendor file. To avoid any future deficiency, the Purchasing Department will submit a Sam.Gov verification of all vendors that will be utilizing federal funds.

2022-002 ? Internal Controls over Compliance with Payroll Disbursements ? Significant Deficiency Federal Program Information: Funding Agency: Department of Agriculture Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Pass Through Award Number: 21000 Pass Through Entity: State of NM PED Award Year: 2022 Condition: 2 out of 40 samples tested, the employees were not paid based on the approved salary schedule. Criteria: Per 2 CFR section 200.430(i) ? Compensation ? personal services ? Standards for Documentation of Personnel Expenses, Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (vii) Budget estimates (i.e. estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Per 2 CFR section 200.303 ? Internal Controls ? The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Effect: The District may unintentionally expense employee?s salary out of the Child Nutrition Cluster funding that does not qualify for Child Nutrition funding or more than what is applicable for the work performed by that employee for Child Nutrition program purposes. Cause: The District did not have proper controls in place to verify that employees were paid based on an approved salary. Auditors? Recommendation: The auditor recommends that the District implement controls for documenting and retaining information to indicate the District follows the requirements over 2 CFR section 200.430(i). Views of Responsible Officials of Auditee: The district will expand the internal controls over the timekeeping and payroll processes by requiring all employee pay applications for the Child Nutrition program be reviewed and approved by the Human Resources Department. A schedule of Pay Rates will be created and submitted to the Board of Education for formal approval, along with the other Salary Schedules approved with the annual budget. In addition, the district is moving to an electronic timekeeping system that will eliminate the use of paper timesheets that must be manually processed for payroll purposes. All Board approved pay rates will be programmed into the electronic timekeeping system so that the need for manual pay rate entry and gross pay calculations will be eliminated.

2022-001 ? Suspension and Debarment - Significant Deficiency Federal Program Information: Funding Agency: Department of Agriculture Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Pass Through Award Number: 21000 Pass Through Entity: State of NM PED Award Year: 2022 Condition: Both samples selected for testing vendor eligibility on sam.gov, we noted the District did not have documentation to support that a review was taken place on vendor eligibility. Per 2 CFR section 200.303 ? Internal Controls ? The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Questioned costs: No questioned costs identified. Effect: If a vendor has been disbarred from receiving Federal funds, the Organization may be liable to pay for the amount and not be reimbursed. Cause: The District did not follow proper Federal policies related to verification of vendors from the excluded parties list system. Auditors? Recommendation: The auditor recommends that the District verify that all vendors are not listed on the excluded parties list system by performing a search on sam.gov and maintaining the results of such search in the vendor?s file. Views of Responsible Officials of Auditee: During the 2021-22 audit, the documentation to support vendor eligibility was not in the vendor?s paperwork for verification. The current process for vendor verification requires a New Vendor Form, a current W-9 Form, Sam.Gov verification of the vendor?s registration status, and an IRS TIN Match, a requirement implemented in FY 2021-22. All of the information obtained is then filed in a vendor file. To avoid any future deficiency, the Purchasing Department will submit a Sam.Gov verification of all vendors that will be utilizing federal funds.

2022-002 ? Internal Controls over Compliance with Payroll Disbursements ? Significant Deficiency Federal Program Information: Funding Agency: Department of Agriculture Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Pass Through Award Number: 21000 Pass Through Entity: State of NM PED Award Year: 2022 Condition: 2 out of 40 samples tested, the employees were not paid based on the approved salary schedule. Criteria: Per 2 CFR section 200.430(i) ? Compensation ? personal services ? Standards for Documentation of Personnel Expenses, Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (vii) Budget estimates (i.e. estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Per 2 CFR section 200.303 ? Internal Controls ? The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Effect: The District may unintentionally expense employee?s salary out of the Child Nutrition Cluster funding that does not qualify for Child Nutrition funding or more than what is applicable for the work performed by that employee for Child Nutrition program purposes. Cause: The District did not have proper controls in place to verify that employees were paid based on an approved salary. Auditors? Recommendation: The auditor recommends that the District implement controls for documenting and retaining information to indicate the District follows the requirements over 2 CFR section 200.430(i). Views of Responsible Officials of Auditee: The district will expand the internal controls over the timekeeping and payroll processes by requiring all employee pay applications for the Child Nutrition program be reviewed and approved by the Human Resources Department. A schedule of Pay Rates will be created and submitted to the Board of Education for formal approval, along with the other Salary Schedules approved with the annual budget. In addition, the district is moving to an electronic timekeeping system that will eliminate the use of paper timesheets that must be manually processed for payroll purposes. All Board approved pay rates will be programmed into the electronic timekeeping system so that the need for manual pay rate entry and gross pay calculations will be eliminated.