Audit 410696

Allowability of Expenditures Funding Agency: U.S. Department of Education Title: Education Stabilization Fund AL Number: 84.425D, 84.425U Criteria or Specific Requirement: OMB’s Uniform Guidance 2 CFR § 200.403 and 2 CFR § 200.302 states that, in order to be allowable under Federal awards, costs must be adequately documented and supported. Additionally, the District's internal control procedures require expenditures to be properly reviewed and approved prior to payment. Condition: The District was unable to provide supporting documentation for all expenditures selected for testing. In addition, evidence of supervisory review and approval was not maintained for certain expenditures. Context: During testing of expenditures charged to federal programs, auditors selected a sample of four transactions for review. For one item in the sample, the District could not provide adequate supporting documentation and evidence that the expenditure had been properly approved prior to payment. Questioned Costs: To be determined by grantor. Effect: Without adequate supporting documentation and evidence of approval, the District cannot demonstrate that expenditures were allowable, allocable, reasonable, and properly authorized under federal program requirements. This increases the risk that unallowable or unauthorized expenditures could be charged to federal awards. Cause: The District did not consistently maintain supporting documentation and approval records for expenditures in accordance with federal requirements and established internal control procedures. Recommendation: We recommend the District strengthen its internal controls over expenditures by ensuring that all transactions charged to federal programs are supported by adequate documentation and retain evidence of appropriate review and approval prior to payment. Management should also implement periodic monitoring procedures to verify compliance with documentation retention requirements. View of Responsible Official: The District agrees with the finding regarding the need to maintain adequate supporting documentation and internal controls over expenditures charged to federal awards. The District recognizes that costs charged to Federal awards must be adequately documented and supported in accordance with 0MB Uniform Guidance, 2 CFR. and that expenditures must be properly reviewed and approved prior to payment. The District will strengthen its procedures to ensure that all expenditures, particularly those charged to Federal grants, have appropriate supporting documentation demonstrating the allowability and business purpose of the expenditure. The District will also ensure that evidence of supervisory review and approval is maintained prior to payment. Staff and supervisors will periodically review expenditure records to ensure documentation and approval requirements are being followed and maintained.