2022-002 Payroll Supporting Documentation CFDA No: 84.041 Program Name: Impact Aid Award Number: N/A Federal Agency: U.S. Department of Education Pass-Through Grantor: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: N/A Summary of Finding: Material Weakness in internal control over major programs Repeat Finding? No Condition One employee did not have FICA or Medicare withheld during the fiscal year and the District could not provide documentation to support why the required taxes were not withheld. The previous Superintendent received two extra-duty stipends totaling $17,314, as well as a $2,615 payout of leave, however, no documentation of calculation or approval could be located. The previous Business Manager received a $6,000 extra duty stipend of and a $1,490 payroll adjustment, however, no documentation of calculation or approval could be located. For two of twelve employees selected, the District paid hourly employees for 80 hours (40 hours per week), however, the timecards for the two employees indicated the employees only worked for 70.82 and 72.75 hours, resulting in the employees being overpaid $243 for work performed. Criteria Arizona Revised Statutes 15-271 states: "A. The auditor general shall determine the accounting systems, accounting methods and accounting procedures for school districts to use. B. The auditor general in conjunction with the department of education shall prescribe a uniform system of financial records (USFR) for all school districts to use each fiscal year." USFR VI-H Payroll states in part: "Payroll Records - Districts should maintain payroll records for all employees. Records should provide adequate support for payroll expenditures....and serve as a basis for preparing payroll vouchers and reports." and "Payroll Processing - 1. Districts should document changes in payroll such as employment, terminations, and pay/position changes. 2. Attendance records, such as time sheets or timecards, should be prepared each pay period for each employee subject to the Fair Labor Standards Act, approved by the employee and the employee?s supervisor, and retained to support the payroll. Uniform Guidance ?200.333 Retention requirements for records states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report..." Cause Internal controls were not developed to ensure new staff was properly trained to maintain accounting records in a complete manner. In addition, controls were not monitored to ensure complete documentation was retained. Effect Financial information the District uses to make decisions and reports provided to the state for oversight could have been materially misstated throughout the fiscal year. Further, the District could end up being in noncompliance with federal and state laws. Recommendation The District should procure a consultant or modify the organizational chart of the District Finance Office to ensure individuals with the skills, knowledge and expertise prepare, review and retain required source documentation.
2022-003 Nonpayroll Supporting Documentation CFDA No: 84.041 Program Name: Impact Aid Award Number: N/A Federal Agency: U.S. Department of Education Pass-Through Grantor: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: N/A Summary of Finding: Material Weakness in internal control over major programs Repeat Finding? No Condition For seven out of the 40 expenditures selected, the District did not retain vendor invoices or equivalent documents to support the expenditures. For 10 out of the 40 expenditures selected, the District did retain a written purchase order for the expenditure. Criteria Arizona Revised Statutes 15-271 states: "A. The auditor general shall determine the accounting systems, accounting methods and accounting procedures for school districts to use. B. The auditor general in conjunction with the department of education shall prescribe a uniform system of financial records (USFR) for all school districts to use each fiscal year." USFR VI-B Source documents states in part: "Source documents are used to initiate accounting transactions and should be retained to support each entry recorded in the accounting records." Uniform Guidance ?200.333 Retention requirements for records states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report..." Cause Internal controls were not developed to ensure new staff was properly trained to maintain accounting records in a complete manner. In addition, controls were not monitored to ensure complete documentation was retained. Effect Financial information the District uses to make decisions and reports provided to the state for oversight could have been materially misstated throughout the fiscal year. Recommendation The District should procure a consultant or modify the organizational chart of the District Finance Office to ensure individuals with the skills, knowledge and expertise prepare, review and retain required source documentation. In addition, material transactions of he fiscal year should be reviewed and replacement documentation should be obtained to replace missing invoice information.
2022-004 Single Audit Submission CFDA No: 84.041 Program Name: Impact Aid Award Number: N/A Federal Agency: U.S. Department of Education Pass-Through Grantor: N/A Compliance Requirement: Reporting Questioned Costs: N/A Summary of Finding: Significant Deficiency in internal control over major programs Repeat Finding? No Condition The District did not submit the single audit reporting package and related data collection form by the required deadline. Criteria The Uniform Guidance section 500.512 states: "...The audit must be completed and the data collection form....and reporting package....must be submitted within the earlier of 30 calendar days after receipt of the auditor?s reports, or nine months after the end of the audit period." Cause The District experienced turnover in the key position responsible for overseeing the single audit. Effect The District is not in compliance with the requirements of the Uniform Guidance. Recommendation We recommend that the District monitor federal grant expenditures and if it is expected that expenditures will exceed $750,000, the District procure audit services promptly.
2022-002 Payroll Supporting Documentation CFDA No: 84.041 Program Name: Impact Aid Award Number: N/A Federal Agency: U.S. Department of Education Pass-Through Grantor: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: N/A Summary of Finding: Material Weakness in internal control over major programs Repeat Finding? No Condition One employee did not have FICA or Medicare withheld during the fiscal year and the District could not provide documentation to support why the required taxes were not withheld. The previous Superintendent received two extra-duty stipends totaling $17,314, as well as a $2,615 payout of leave, however, no documentation of calculation or approval could be located. The previous Business Manager received a $6,000 extra duty stipend of and a $1,490 payroll adjustment, however, no documentation of calculation or approval could be located. For two of twelve employees selected, the District paid hourly employees for 80 hours (40 hours per week), however, the timecards for the two employees indicated the employees only worked for 70.82 and 72.75 hours, resulting in the employees being overpaid $243 for work performed. Criteria Arizona Revised Statutes 15-271 states: "A. The auditor general shall determine the accounting systems, accounting methods and accounting procedures for school districts to use. B. The auditor general in conjunction with the department of education shall prescribe a uniform system of financial records (USFR) for all school districts to use each fiscal year." USFR VI-H Payroll states in part: "Payroll Records - Districts should maintain payroll records for all employees. Records should provide adequate support for payroll expenditures....and serve as a basis for preparing payroll vouchers and reports." and "Payroll Processing - 1. Districts should document changes in payroll such as employment, terminations, and pay/position changes. 2. Attendance records, such as time sheets or timecards, should be prepared each pay period for each employee subject to the Fair Labor Standards Act, approved by the employee and the employee?s supervisor, and retained to support the payroll. Uniform Guidance ?200.333 Retention requirements for records states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report..." Cause Internal controls were not developed to ensure new staff was properly trained to maintain accounting records in a complete manner. In addition, controls were not monitored to ensure complete documentation was retained. Effect Financial information the District uses to make decisions and reports provided to the state for oversight could have been materially misstated throughout the fiscal year. Further, the District could end up being in noncompliance with federal and state laws. Recommendation The District should procure a consultant or modify the organizational chart of the District Finance Office to ensure individuals with the skills, knowledge and expertise prepare, review and retain required source documentation.
2022-003 Nonpayroll Supporting Documentation CFDA No: 84.041 Program Name: Impact Aid Award Number: N/A Federal Agency: U.S. Department of Education Pass-Through Grantor: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: N/A Summary of Finding: Material Weakness in internal control over major programs Repeat Finding? No Condition For seven out of the 40 expenditures selected, the District did not retain vendor invoices or equivalent documents to support the expenditures. For 10 out of the 40 expenditures selected, the District did retain a written purchase order for the expenditure. Criteria Arizona Revised Statutes 15-271 states: "A. The auditor general shall determine the accounting systems, accounting methods and accounting procedures for school districts to use. B. The auditor general in conjunction with the department of education shall prescribe a uniform system of financial records (USFR) for all school districts to use each fiscal year." USFR VI-B Source documents states in part: "Source documents are used to initiate accounting transactions and should be retained to support each entry recorded in the accounting records." Uniform Guidance ?200.333 Retention requirements for records states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report..." Cause Internal controls were not developed to ensure new staff was properly trained to maintain accounting records in a complete manner. In addition, controls were not monitored to ensure complete documentation was retained. Effect Financial information the District uses to make decisions and reports provided to the state for oversight could have been materially misstated throughout the fiscal year. Recommendation The District should procure a consultant or modify the organizational chart of the District Finance Office to ensure individuals with the skills, knowledge and expertise prepare, review and retain required source documentation. In addition, material transactions of he fiscal year should be reviewed and replacement documentation should be obtained to replace missing invoice information.
2022-004 Single Audit Submission CFDA No: 84.041 Program Name: Impact Aid Award Number: N/A Federal Agency: U.S. Department of Education Pass-Through Grantor: N/A Compliance Requirement: Reporting Questioned Costs: N/A Summary of Finding: Significant Deficiency in internal control over major programs Repeat Finding? No Condition The District did not submit the single audit reporting package and related data collection form by the required deadline. Criteria The Uniform Guidance section 500.512 states: "...The audit must be completed and the data collection form....and reporting package....must be submitted within the earlier of 30 calendar days after receipt of the auditor?s reports, or nine months after the end of the audit period." Cause The District experienced turnover in the key position responsible for overseeing the single audit. Effect The District is not in compliance with the requirements of the Uniform Guidance. Recommendation We recommend that the District monitor federal grant expenditures and if it is expected that expenditures will exceed $750,000, the District procure audit services promptly.