We acknowledge the critical importance of establishing and maintaining an effective system of internal control over compliance, including allowable costs under federal awards per Title 2 Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirement...
We acknowledge the critical importance of establishing and maintaining an effective system of internal control over compliance, including allowable costs under federal awards per Title 2 Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) that a non-federal entity may charge only allowable costs that are adequately documented and are necessary and reasonable for performance of the federal award under the principles of 2 CFR Part 200, Subpart E. As such, we are committed to taking immediate corrective actions to address the deficiencies to ensure accurate billing rates for equipment charges are used and that charges for internally generated fees, such as burn mix, are documented prior to charging the fees to the program. We have outlined below the specific steps we have already undertaken and will undertake: 1.Development of Standardized Equipment Rate Schedule The District has developed and will maintain a standardized schedule of approved equipment billing rates used for federal and state grant programs. This schedule will be based on published or internally approved rates and will be reviewed annually to ensure accuracy. 2.Verification of Billing Rates Prior to Grant Charges Prior to charging equipment usage to any federal award, finance staff will verify that the billing rate applied matches the approved rate schedule. This verification will be documented and retained with the supporting grant expenditure documentation. 3.Documentation of Internally Generated Rates For internally generated fees, including burn mix or similar materials, the District will develop and maintain formal documentation supporting the calculation of the rate. This documentation will include the components used to determine the rate (such as material cost, labor, and overhead where applicable) and will be retained in the grant support files. 4.Pre-Approval of Internally Generated Charges Internally generated billing rates will be reviewed and approved by management prior to being charged to any federal grant program. The approved rate documentation will be maintained as part of the grant compliance records. 5.Enhanced Grant Expenditure Review Process The District will implement a secondary review process for grant-related expenditures. Finance staff or management will review charges to federal awards to ensure the expenditures are supported, reasonable, allowable under Uniform Guidance, and calculated using the correct approved billing rates. 6.Training on Uniform Guidance Requirements Finance staff and personnel responsible for preparing or submitting grant-related charges will receive refresher training on federal grant compliance requirements under 2 CFR Part 200, specifically related to allowable costs, documentation requirements, and internal controls over grant expenditures. 7.Ongoing Monitoring of Grant Compliance As part of the year-end grant reporting process, management will periodically review equipment charges and internally generated fees charged to federal awards to ensure the established procedures are consistently followed and that adequate supporting documentation is maintained. Responsible Parties and Accountability to be designated: 1.Jackie Dunklee, CFO, and Isaac Pawning, Division Chief: Responsible for overseeing the development and update of a standardized schedule of approved equipment billing rates and ensuring compliance with state, local, and federal regulations. 2.Thelesa Montoya-Neves, Accounting Manager: Responsible for ongoing monitoring and review of equipment charges to federal awards. 3.Erick Rodriguez, Compliance Officer: Responsible for ensuring that federal grant expenditures are supported, reasonable, allowable under Uniform Guidance, and calculated using the correct approved billing rates. By implementing these corrective actions, we are committed to addressing the significant deficiency of internal controls over compliance to ensure accurate billing rates for equipment charges are used and that charges for internally generated fees, such as burn mix, are documented prior to charging the fees to the program. Anticipated Completion Date: June 2026