FINDING 2022-012 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-138-PN01, 21619-138-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-004. Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have effective internal controls in place to ensure that non-public school expenditures were appropriately identified and reported. The School Corporation requested the minimum nonpublic proportionate share amount of $2,239 from grant award 21611-138-PN01 and $507 from grant award 21619-138-PN01; however, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the Indiana Department of Education as required. The lack of internal controls and noncompliance was isolated to the 21611-138-PN01 and 21619-138-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "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). . . ." 2 CFR 200.403 (Uniform Guidance) states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 46 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.208(b) (Uniform Guidance) states in part: "The Federal awarding agency or passthrough entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Management had not developed nor implemented a system of internal controls that would have ensured compliance with the earmarking requirements of the Matching, Level of Effort, and Earmarking compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the earmarking requirements of the Matching, Level of Effort, Earmarking compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: Title I Grants to Local Educational Agencies - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 30 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective system of internal controls was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The School Corporation had not established an effective system of internal controls to ensure that proper documentation was retained for audit. The School Corporation was unable to provide supporting documentation for one of five of the journal entries tested. For the one journal entry, we were unable to determine if the Title I fund transfers in, totaling $13,434, and transfers out, totaling $95,115, were for allowable activities and costs for the program. The lack of effective internal controls and the failure to retain supporting documentation was isolated to the transfers noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal controls 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). . . ." 2 CFR 200.333 (Uniform Guidance) 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 or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass through entity in the case of a subrecipient. . . ." 2 CFR 200.334 (Revised Uniform Guidance) 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 or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: INDIANA STATE BOARD OF ACCOUNTS 31 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . (g) Be adequately documented. . . ." Cause Management had not established an effective system of internal controls that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit, related to the grant agreements and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect The failure to establish an effective system of internal controls and to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with compliance requirements listed above. Questioned Costs Known questioned costs of $108,549 were identified, as detailed in Condition and Context. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure documentation be maintained and made available for audit related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: Title I Grants to Local Educational Agencies - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 30 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective system of internal controls was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The School Corporation had not established an effective system of internal controls to ensure that proper documentation was retained for audit. The School Corporation was unable to provide supporting documentation for one of five of the journal entries tested. For the one journal entry, we were unable to determine if the Title I fund transfers in, totaling $13,434, and transfers out, totaling $95,115, were for allowable activities and costs for the program. The lack of effective internal controls and the failure to retain supporting documentation was isolated to the transfers noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal controls 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). . . ." 2 CFR 200.333 (Uniform Guidance) 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 or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass through entity in the case of a subrecipient. . . ." 2 CFR 200.334 (Revised Uniform Guidance) 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 or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: INDIANA STATE BOARD OF ACCOUNTS 31 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . (g) Be adequately documented. . . ." Cause Management had not established an effective system of internal controls that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit, related to the grant agreements and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect The failure to establish an effective system of internal controls and to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with compliance requirements listed above. Questioned Costs Known questioned costs of $108,549 were identified, as detailed in Condition and Context. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure documentation be maintained and made available for audit related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-013 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 47 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not designed nor implemented at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act was for the purpose of preventing, preparing for, or responding to the Novel Coronavirus. Of 12 transfers from education stabilization funds, 6 did not have supporting documentation to provide sufficient explanation for how the use of funds prevented, prepared for, or responded to COVID-19. The total of unsupported transfers was $2,168,761. This amount was considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "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). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." INDIANA STATE BOARD OF ACCOUNTS 48 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Public Law 116-136, Section 18003(d) states: "Uses of Funds - A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. INDIANA STATE BOARD OF ACCOUNTS 49 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Consolidated Appropriations Act, 2021, P.L. 116-260, section 313(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this section may use the funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the IDEA and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. INDIANA STATE BOARD OF ACCOUNTS 50 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (A) Administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction. (B) Implementing evidence-based activities to meet the comprehensive needs of students. (C) Providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment. (D) Tracking student attendance and improving student engagement in distance education. (13) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (14) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (15) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." American Rescue Plan Act of 2021, H.R. 1319, section 2001(e)states: "USES OF FUNDS.?A local educational agency that receives funds under this section? INDIANA STATE BOARD OF ACCOUNTS 51 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups described in section 1111(b)(2)(B)(xi) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311(b)(2)(B)(xi)), students experiencing homelessness, and children and youth in foster care; and (2) shall use the remaining funds for any of the following: (A) Any activity authorized by the Elementary and Secondary Education Act of 1965. (B) Any activity authorized by the Individuals with Disabilities Education Act. (C) Any activity authorized by the Adult Education and Family Literacy Act. (D) Any activity authorized by the Carl D. Perkins Career and Technical Education Act of 2006. (E) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (F) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (G) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (H) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (I) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (J) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the Individuals with Disabilities Education Act and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. (K) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (L) Providing mental health services and supports, including through the implementation of evidence-based full-service community schools. INDIANA STATE BOARD OF ACCOUNTS 52 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (M) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (N) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (i) administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction; (ii) implementing evidence-based activities to meet the comprehensive needs of students; (iii) providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment; and (iv) tracking student attendance and improving student engagement in distance education. (O) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (P) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (Q) Developing strategies and implementing public health protocols including, to the greatest extent practicable, policies in line with guidance from the Centers for Disease Control and Prevention for the reopening and operation of school facilities to effectively maintain the health and safety of students, educators, and other staff. (R) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Cause Management had not designed nor implemented a system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and available for audit related to the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 53 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Questioned Costs Questioned costs of $2,168,761 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and available for audit and comply with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report
FINDING 2022-013 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 47 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not designed nor implemented at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act was for the purpose of preventing, preparing for, or responding to the Novel Coronavirus. Of 12 transfers from education stabilization funds, 6 did not have supporting documentation to provide sufficient explanation for how the use of funds prevented, prepared for, or responded to COVID-19. The total of unsupported transfers was $2,168,761. This amount was considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "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). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." INDIANA STATE BOARD OF ACCOUNTS 48 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Public Law 116-136, Section 18003(d) states: "Uses of Funds - A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. INDIANA STATE BOARD OF ACCOUNTS 49 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Consolidated Appropriations Act, 2021, P.L. 116-260, section 313(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this section may use the funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the IDEA and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. INDIANA STATE BOARD OF ACCOUNTS 50 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (A) Administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction. (B) Implementing evidence-based activities to meet the comprehensive needs of students. (C) Providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment. (D) Tracking student attendance and improving student engagement in distance education. (13) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (14) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (15) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." American Rescue Plan Act of 2021, H.R. 1319, section 2001(e)states: "USES OF FUNDS.?A local educational agency that receives funds under this section? INDIANA STATE BOARD OF ACCOUNTS 51 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups described in section 1111(b)(2)(B)(xi) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311(b)(2)(B)(xi)), students experiencing homelessness, and children and youth in foster care; and (2) shall use the remaining funds for any of the following: (A) Any activity authorized by the Elementary and Secondary Education Act of 1965. (B) Any activity authorized by the Individuals with Disabilities Education Act. (C) Any activity authorized by the Adult Education and Family Literacy Act. (D) Any activity authorized by the Carl D. Perkins Career and Technical Education Act of 2006. (E) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (F) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (G) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (H) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (I) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (J) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the Individuals with Disabilities Education Act and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. (K) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (L) Providing mental health services and supports, including through the implementation of evidence-based full-service community schools. INDIANA STATE BOARD OF ACCOUNTS 52 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (M) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (N) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (i) administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction; (ii) implementing evidence-based activities to meet the comprehensive needs of students; (iii) providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment; and (iv) tracking student attendance and improving student engagement in distance education. (O) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (P) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (Q) Developing strategies and implementing public health protocols including, to the greatest extent practicable, policies in line with guidance from the Centers for Disease Control and Prevention for the reopening and operation of school facilities to effectively maintain the health and safety of students, educators, and other staff. (R) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Cause Management had not designed nor implemented a system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and available for audit related to the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 53 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Questioned Costs Questioned costs of $2,168,761 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and available for audit and comply with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report
FINDING 2022-013 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 47 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not designed nor implemented at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act was for the purpose of preventing, preparing for, or responding to the Novel Coronavirus. Of 12 transfers from education stabilization funds, 6 did not have supporting documentation to provide sufficient explanation for how the use of funds prevented, prepared for, or responded to COVID-19. The total of unsupported transfers was $2,168,761. This amount was considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "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). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." INDIANA STATE BOARD OF ACCOUNTS 48 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Public Law 116-136, Section 18003(d) states: "Uses of Funds - A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. INDIANA STATE BOARD OF ACCOUNTS 49 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Consolidated Appropriations Act, 2021, P.L. 116-260, section 313(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this section may use the funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the IDEA and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. INDIANA STATE BOARD OF ACCOUNTS 50 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (A) Administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction. (B) Implementing evidence-based activities to meet the comprehensive needs of students. (C) Providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment. (D) Tracking student attendance and improving student engagement in distance education. (13) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (14) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (15) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." American Rescue Plan Act of 2021, H.R. 1319, section 2001(e)states: "USES OF FUNDS.?A local educational agency that receives funds under this section? INDIANA STATE BOARD OF ACCOUNTS 51 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups described in section 1111(b)(2)(B)(xi) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311(b)(2)(B)(xi)), students experiencing homelessness, and children and youth in foster care; and (2) shall use the remaining funds for any of the following: (A) Any activity authorized by the Elementary and Secondary Education Act of 1965. (B) Any activity authorized by the Individuals with Disabilities Education Act. (C) Any activity authorized by the Adult Education and Family Literacy Act. (D) Any activity authorized by the Carl D. Perkins Career and Technical Education Act of 2006. (E) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (F) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (G) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (H) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (I) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (J) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the Individuals with Disabilities Education Act and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. (K) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (L) Providing mental health services and supports, including through the implementation of evidence-based full-service community schools. INDIANA STATE BOARD OF ACCOUNTS 52 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (M) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (N) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (i) administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction; (ii) implementing evidence-based activities to meet the comprehensive needs of students; (iii) providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment; and (iv) tracking student attendance and improving student engagement in distance education. (O) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (P) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (Q) Developing strategies and implementing public health protocols including, to the greatest extent practicable, policies in line with guidance from the Centers for Disease Control and Prevention for the reopening and operation of school facilities to effectively maintain the health and safety of students, educators, and other staff. (R) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Cause Management had not designed nor implemented a system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and available for audit related to the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 53 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Questioned Costs Questioned costs of $2,168,761 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and available for audit and comply with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report
FINDING 2022-013 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 47 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not designed nor implemented at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act was for the purpose of preventing, preparing for, or responding to the Novel Coronavirus. Of 12 transfers from education stabilization funds, 6 did not have supporting documentation to provide sufficient explanation for how the use of funds prevented, prepared for, or responded to COVID-19. The total of unsupported transfers was $2,168,761. This amount was considered questioned costs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "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). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. . . ." INDIANA STATE BOARD OF ACCOUNTS 48 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Public Law 116-136, Section 18003(d) states: "Uses of Funds - A local educational agency that receives funds under this title may use funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements. (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. INDIANA STATE BOARD OF ACCOUNTS 49 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Consolidated Appropriations Act, 2021, P.L. 116-260, section 313(d) states: "USES OF FUNDS.?A local educational agency that receives funds under this section may use the funds for any of the following: (1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) ('IDEA'), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) ('the Perkins Act'), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.). (2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools. (4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (8) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the IDEA and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. INDIANA STATE BOARD OF ACCOUNTS 50 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (A) Administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction. (B) Implementing evidence-based activities to meet the comprehensive needs of students. (C) Providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment. (D) Tracking student attendance and improving student engagement in distance education. (13) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (14) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (15) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." American Rescue Plan Act of 2021, H.R. 1319, section 2001(e)states: "USES OF FUNDS.?A local educational agency that receives funds under this section? INDIANA STATE BOARD OF ACCOUNTS 51 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups described in section 1111(b)(2)(B)(xi) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311(b)(2)(B)(xi)), students experiencing homelessness, and children and youth in foster care; and (2) shall use the remaining funds for any of the following: (A) Any activity authorized by the Elementary and Secondary Education Act of 1965. (B) Any activity authorized by the Individuals with Disabilities Education Act. (C) Any activity authorized by the Adult Education and Family Literacy Act. (D) Any activity authorized by the Carl D. Perkins Career and Technical Education Act of 2006. (E) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus. (F) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population. (G) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies. (H) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases. (I) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency. (J) Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the Individuals with Disabilities Education Act and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements. (K) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment. (L) Providing mental health services and supports, including through the implementation of evidence-based full-service community schools. INDIANA STATE BOARD OF ACCOUNTS 52 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (M) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (N) Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by? (i) administering and using high-quality assessments that are valid and reliable, to accurately assess students' academic progress and assist educators in meeting students' academic needs, including through differentiating instruction; (ii) implementing evidence-based activities to meet the comprehensive needs of students; (iii) providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment; and (iv) tracking student attendance and improving student engagement in distance education. (O) School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs. (P) Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and nonmechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement. (Q) Developing strategies and implementing public health protocols including, to the greatest extent practicable, policies in line with guidance from the Centers for Disease Control and Prevention for the reopening and operation of school facilities to effectively maintain the health and safety of students, educators, and other staff. (R) Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency." Cause Management had not designed nor implemented a system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and available for audit related to the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 53 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Questioned Costs Questioned costs of $2,168,761 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and available for audit and comply with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: $16,384 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed instances in which expenditures had not been properly approved by the pass-through entity. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $2,438,975.58 were expended and reported on the Banks County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? To assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program?s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Further, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 ? Required Certifications, and include provisions that require LEAs ?to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...? Condition: A sample of 36 non-personal services expenditures was randomly selected for testing using a non-statistical sampling approach. Two individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented, and applicable compliance requirements were met. It was noted that four expenditures totaling $16,384 were not appropriately approved by GaDOE through the Consolidated Application process as required. Questioned Costs: Upon testing a sample of $417,627 in ESSER program expenditures, known questioned costs of $3,384 were identified. Using the population being sampled, which totaled $1,668,399, we project the likely questioned costs to be approximately $13,518. In addition, known questioned costs identified for improper payments associated with individually significant items tested totaled $13,000; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $16,384 and $26,518, respectively. Cause: The School District did not have effective internal control procedures in place around the ESSER program to ensure that all expenditures were compliant with applicable policies and regulations. Effect: The School District was not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to accurately develop and amend budget information through the Consolidated Application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should revise current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: $16,384 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed instances in which expenditures had not been properly approved by the pass-through entity. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $2,438,975.58 were expended and reported on the Banks County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? To assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program?s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Further, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 ? Required Certifications, and include provisions that require LEAs ?to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...? Condition: A sample of 36 non-personal services expenditures was randomly selected for testing using a non-statistical sampling approach. Two individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented, and applicable compliance requirements were met. It was noted that four expenditures totaling $16,384 were not appropriately approved by GaDOE through the Consolidated Application process as required. Questioned Costs: Upon testing a sample of $417,627 in ESSER program expenditures, known questioned costs of $3,384 were identified. Using the population being sampled, which totaled $1,668,399, we project the likely questioned costs to be approximately $13,518. In addition, known questioned costs identified for improper payments associated with individually significant items tested totaled $13,000; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $16,384 and $26,518, respectively. Cause: The School District did not have effective internal control procedures in place around the ESSER program to ensure that all expenditures were compliant with applicable policies and regulations. Effect: The School District was not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to accurately develop and amend budget information through the Consolidated Application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should revise current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: $16,384 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed instances in which expenditures had not been properly approved by the pass-through entity. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $2,438,975.58 were expended and reported on the Banks County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? To assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program?s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Further, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 ? Required Certifications, and include provisions that require LEAs ?to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...? Condition: A sample of 36 non-personal services expenditures was randomly selected for testing using a non-statistical sampling approach. Two individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented, and applicable compliance requirements were met. It was noted that four expenditures totaling $16,384 were not appropriately approved by GaDOE through the Consolidated Application process as required. Questioned Costs: Upon testing a sample of $417,627 in ESSER program expenditures, known questioned costs of $3,384 were identified. Using the population being sampled, which totaled $1,668,399, we project the likely questioned costs to be approximately $13,518. In addition, known questioned costs identified for improper payments associated with individually significant items tested totaled $13,000; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $16,384 and $26,518, respectively. Cause: The School District did not have effective internal control procedures in place around the ESSER program to ensure that all expenditures were compliant with applicable policies and regulations. Effect: The School District was not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to accurately develop and amend budget information through the Consolidated Application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should revise current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
Allowable costs - U.S. Department of Agriculture, Department of Social Services, The Emergency Food Assistance (Food Distribution Cluster), Assistance Listing # 10.565, 10.568 & 10.569, June 30, 2022 Award Year, pass-through State of Missouri Department of Health and Senior Services. Criteria: The Administrative cost grant can only be used for activities intrinsic to the processing, transportation and distribution of the Emergency Food Assistance Program (?TEFAP?) commodities, costs associated with determination of eligibility, costs of recordkeeping, auditing or other administrative procedure required for program participation, or costs involved in publishing announcements of times and locations of distribution. Under 2 CFR 200.403, costs must not be included as a cost or used to meet cost sharing or matching requirements of any other federal financed program in either the current or prior period. Under 2 CFR 200.334, non-federal entities are required to retain financial records and supporting documentation for a three-year period from the date of financial reporting to the pass-through entity. Condition: Administrative costs are submitted to the state monthly for reimbursement on the Record of Expenditures under the TEFAP Financial Assistance form (?FD-32D?). The State reimburses the Organization for administrative costs as determined by the state on a monthly basis. Typically, the monthly reimbursement amount is significantly less than the actual amount of allowed administrative expenses incurred by the Organization. During our procedures, we noted that certain expenditures, amounting to approximately $3,290, which were included on the FD-32D of which supporting documentation the Organization is required to retain under 2 CFR part 200 was lacking. As such, we could verify these costs related to activities allowed for reimbursement under 2 CFR part 200. Questioned Costs: None. The monthly reimbursement requests for administrative costs submitted by the Organization exceed the amounts reimbursed by the State and therefore these amounts are not considered to be reimbursed but should not have been included in the monthly submittal as the supporting documentation was unavailable to ensure that the related costs were allowable. Context: Employees with reporting duties for the program are including expenditures that are not substantiated by receipts demonstrating they are allowed under the terms of the grant. Effect: Costs which are possibly unallowable, due to the lack of supporting documentation, are being improperly included on the monthly reporting to the State. It was noted that after excluding these costs from the monthly reports, the actual allowed administrative costs incurred and submitted by the Organization to the State remained greater than the amount reimbursed by the State. Cause: The employees responsible for the preparation of the report did not have the proper information, training and knowledge of the program to ensure that only allowable costs are included on the report. Recommendation: The Organization should review its accounting and reporting policies to ensure that steps are added to include a review for unallowable costs. Identification as a Repeat Finding: This is a repeat of finding 2021-002. Views of Responsible Officials and Corrective Actions See Corrective Action Plan
Child Nutrition Cluster ?School Nutrition Program ? Assistance Listing #10.555 and Summer Food Service Program ? Assistance Listing #10.559 2022-005 ? Significant Deficiency in Controls over Compliance and Compliance Finding: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding 2021-006 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management, procurement and compensation are in need of adoption and enhancement to meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: The Catholic Secondary Schools of the Diocese of Grand Rapids have limited written policies and procedures that are applicable to federal awards and address the direct and material compliance matters important to the major federal program. In addition, there are unique policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that are relevant to the Schools? federal programs. Recommendations: The Catholic Secondary Schools of the Diocese of Grand Rapids should adopt the following written policies and updates: ? Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ? Identification - Title of the award, CFDA number ? Complete disclosure of accurate and current financial results of each federal award ? Source and application of funds for federal award activity ? Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability access the records (?200.333 - ?200.337) ? Written procedure to implement cash management requirements (see below) ? Written procedures for determining the allowability of costs (see below) ? Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ? Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the Schools ensure compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ? Procurement Standards (2 CFR 200.317 ? 200.326) The Schools must have a written policy that promotes full and open vendor competition, conflict of interest policies should cover employees as well as the organization, and general purchase requirements with specific thresholds as set forth by the Uniform Guidance. There are five allowable procurement methods as described in ?200.320. ? Policy Guide (2 CFR 200.400) In summary, the Schools must have written policies that document the efficient and effective administration of federal awards through sound management practices. The Schools have the primary responsibility for employing whatever form of sound organization and management techniques may be necessary to assure proper and efficient administration of the federal awards. The accounting practices must be consistent with Uniform Guidance cost principles, support the accumulation of costs as required, and must provide for adequate documentation to support costs charged to the federal award. Views of Responsible Officials and Planned Corrective Actions: Child Nutrition Cluster ?School Nutrition Program ? Assistance Listing #10.555 and Summer Food Service Program ? Assistance Listing #10.559 2022-005 ? Significant Deficiency in Controls over Compliance and Compliance Finding: Administrative Requirements of Uniform Guidance ? Administrative Policies This is also a compliance finding, not just controls - UPDATED This is a repeat of prior year finding 2021-006 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management, procurement and compensation are in need of adoption and enhancement to meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: The Catholic Secondary Schools of the Diocese of Grand Rapids have limited written policies and procedures that are applicable to federal awards and address the direct and material compliance matters important to the major federal program. In addition, there are unique policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that are relevant to the Schools? federal programs. Recommendations: The Catholic Secondary Schools of the Diocese of Grand Rapids should adopt the following written policies and updates: ? Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ? Identification - Title of the award, CFDA number ? Complete disclosure of accurate and current financial results of each federal award ? Source and application of funds for federal award activity ? Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability access the records (?200.333 - ?200.337) ? Written procedure to implement cash management requirements (see below) ? Written procedures for determining the allowability of costs (see below) ? Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ? Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the Schools ensure compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ? Procurement Standards (2 CFR 200.317 ? 200.326) The Schools must have a written policy that promotes full and open vendor competition, conflict of interest policies should cover employees as well as the organization, and general purchase requirements with specific thresholds as set forth by the Uniform Guidance. There are five allowable procurement methods as described in ?200.320. ? Policy Guide (2 CFR 200.400) In summary, the Schools must have written policies that document the efficient and effective administration of federal awards through sound management practices. The Schools have the primary responsibility for employing whatever form of sound organization and management techniques may be necessary to assure proper and efficient administration of the federal awards. The accounting practices must be consistent with Uniform Guidance cost principles, support the accumulation of costs as required, and must provide for adequate documentation to support costs charged to the federal award. Views of Responsible Officials and Planned Corrective Actions: We concur with the findings of the auditors. We have developed a plan to address the findings, and are actively working to implement that plan. The corrective action plan is attached to this report.
Child Nutrition Cluster ?School Nutrition Program ? Assistance Listing #10.555 and Summer Food Service Program ? Assistance Listing #10.559 2022-005 ? Significant Deficiency in Controls over Compliance and Compliance Finding: Administrative Requirements of Uniform Guidance ? Administrative Policies This is a repeat of prior year finding 2021-006 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management, procurement and compensation are in need of adoption and enhancement to meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: The Catholic Secondary Schools of the Diocese of Grand Rapids have limited written policies and procedures that are applicable to federal awards and address the direct and material compliance matters important to the major federal program. In addition, there are unique policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that are relevant to the Schools? federal programs. Recommendations: The Catholic Secondary Schools of the Diocese of Grand Rapids should adopt the following written policies and updates: ? Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ? Identification - Title of the award, CFDA number ? Complete disclosure of accurate and current financial results of each federal award ? Source and application of funds for federal award activity ? Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability access the records (?200.333 - ?200.337) ? Written procedure to implement cash management requirements (see below) ? Written procedures for determining the allowability of costs (see below) ? Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ? Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the Schools ensure compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ? Procurement Standards (2 CFR 200.317 ? 200.326) The Schools must have a written policy that promotes full and open vendor competition, conflict of interest policies should cover employees as well as the organization, and general purchase requirements with specific thresholds as set forth by the Uniform Guidance. There are five allowable procurement methods as described in ?200.320. ? Policy Guide (2 CFR 200.400) In summary, the Schools must have written policies that document the efficient and effective administration of federal awards through sound management practices. The Schools have the primary responsibility for employing whatever form of sound organization and management techniques may be necessary to assure proper and efficient administration of the federal awards. The accounting practices must be consistent with Uniform Guidance cost principles, support the accumulation of costs as required, and must provide for adequate documentation to support costs charged to the federal award. Views of Responsible Officials and Planned Corrective Actions: Child Nutrition Cluster ?School Nutrition Program ? Assistance Listing #10.555 and Summer Food Service Program ? Assistance Listing #10.559 2022-005 ? Significant Deficiency in Controls over Compliance and Compliance Finding: Administrative Requirements of Uniform Guidance ? Administrative Policies This is also a compliance finding, not just controls - UPDATED This is a repeat of prior year finding 2021-006 Conditions and Criteria: Written policies associated with financial management, allowable costs, cash management, procurement and compensation are in need of adoption and enhancement to meet the administrative requirements of Uniform Guidance (2 CFR 200). Cause/Context: The Catholic Secondary Schools of the Diocese of Grand Rapids have limited written policies and procedures that are applicable to federal awards and address the direct and material compliance matters important to the major federal program. In addition, there are unique policy requirements of Uniform Guidance related to financial management, allowable costs, cash management and procurement that are relevant to the Schools? federal programs. Recommendations: The Catholic Secondary Schools of the Diocese of Grand Rapids should adopt the following written policies and updates: ? Financial Management (2 CFR 200.302) The financial management policy should include records documenting compliance, and the tracking of funds to determine that expenditures are in accordance with the terms and conditions of the federal awards. The financial management and reporting system must provide the following: ? Identification - Title of the award, CFDA number ? Complete disclosure of accurate and current financial results of each federal award ? Source and application of funds for federal award activity ? Record retention and access ? define the time period for which records must be kept (can vary by grant agreement), and who has the ability access the records (?200.333 - ?200.337) ? Written procedure to implement cash management requirements (see below) ? Written procedures for determining the allowability of costs (see below) ? Cash Management (2 CFR 200.305) A written policy is required by Uniform Guidance detailing the Schools? procedures to minimize the time that elapses between draw and expenditure of federal dollars. ? Allowable Costs (2 CFR 200.302(b)(7)) The Schools must have written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of Uniform Guidance and the terms and conditions of the Federal award. This includes the determination of allowable costs and the review of this determination. The standard assumes policies and procedures are in place for disbursements, and the allowable cost policy will demonstrate how the Schools ensure compliance. The criteria for costs to be considered allowable are documented within 2 CFR 200.403. ? Procurement Standards (2 CFR 200.317 ? 200.326) The Schools must have a written policy that promotes full and open vendor competition, conflict of interest policies should cover employees as well as the organization, and general purchase requirements with specific thresholds as set forth by the Uniform Guidance. There are five allowable procurement methods as described in ?200.320. ? Policy Guide (2 CFR 200.400) In summary, the Schools must have written policies that document the efficient and effective administration of federal awards through sound management practices. The Schools have the primary responsibility for employing whatever form of sound organization and management techniques may be necessary to assure proper and efficient administration of the federal awards. The accounting practices must be consistent with Uniform Guidance cost principles, support the accumulation of costs as required, and must provide for adequate documentation to support costs charged to the federal award. Views of Responsible Officials and Planned Corrective Actions: We concur with the findings of the auditors. We have developed a plan to address the findings, and are actively working to implement that plan. The corrective action plan is attached to this report.
FINDING 2022-003 Subject: Title I Grants to Local Educational Agencies - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014 FY2021, S010A200014 FY2021 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context Costs charged to grant funds must be adequately documented. To adequately document payroll expenses charged to the grant fund, contracts or other documentation supporting the employees' approved rates of pay are necessary. The School Corporation utilized a financial software system that has two different sides, an employee portal side and an administrator side. Employee contracts are approved by the employee, the Superintendent of Schools, and the President of the School Board within the system on the employee portal side. Once approved, the data in the employee portal side is fed into a process in the administrator side. The School Corporation could not provide contracts for 10 of 15 employees tested, as the contracts were not properly archived in the financial software used to electronically approve and archive employment contracts. As such, we could not verify the employees were paid their contracted rate for hours spent working on grant-related activities. This resulted in known questioned costs of $203,488. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "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). . . ." INDIANA STATE BOARD OF ACCOUNTS 24 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 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 or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) 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; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 25 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, not all employment contracts could be presented for audit nor could documentation be provided to support time charged to the grant. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were known questioned costs of $203,488 as identified in Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contracts and certifications, as appropriate, are retained to support the amounts paid from Title I program funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response The alternative documentation provided was a snapshot from the administrator side of the financial software system; however, the original source document, which was the contract that was approved by the employee, the Superintendent of Schools, and the President of the School Board, was not provided to substantiate the amounts in the administrator side of the financial software system. We reaffirm our finding and will review the status of the finding during our next audit.
FINDING 2022-006 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters 30 INDIANA STATE BOARD OF ACCOUNTS SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. Costs charged to grant funds must be adequately documented. To adequately document payroll expenses charged to the grant fund, contracts or other documentation supporting the employees' approved rates of pay are necessary. The School Corporation utilized a financial software system that has two different sides, an employee portal side and an administrator side. Employee contracts are approved by the employee, the Superintendent of Schools, and the President of the School Board within the system on the employee portal side. Once approved, the data in the employee portal side is fed into a process in the administrator side. The School Corporation could not provide contracts for 3 of 13 employees tested, as the contracts were not properly archived in the financial software used to electronically approve and archive employment contracts. As such, we could not verify the employees were paid their contracted rate for hours spent working on grant-related activities. This resulted in known questioned costs of $26,207. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "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). . . ." 2 CFR 200.334 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 or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 31 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) 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; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, not all employment contracts could be presented for audit nor could documentation be provided to support time charged to the grant. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were known questioned costs of $26,207 as identified in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contracts and certifications, as appropriate, are retained to support the amounts paid from Education Stabilization Fund program funds. INDIANA STATE BOARD OF ACCOUNTS 32 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response The alternative documentation provided was a snapshot from the administrator side of the financial software system; however, the original source document, which was the contract that was approved by the employee, the Superintendent of Schools, and the President of the School Board, was not provided to substantiate the amounts in the administrator side of the financial software system. We reaffirm our finding and will review the status of the finding during our next audit.
FINDING 2022-006 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters 30 INDIANA STATE BOARD OF ACCOUNTS SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. Costs charged to grant funds must be adequately documented. To adequately document payroll expenses charged to the grant fund, contracts or other documentation supporting the employees' approved rates of pay are necessary. The School Corporation utilized a financial software system that has two different sides, an employee portal side and an administrator side. Employee contracts are approved by the employee, the Superintendent of Schools, and the President of the School Board within the system on the employee portal side. Once approved, the data in the employee portal side is fed into a process in the administrator side. The School Corporation could not provide contracts for 3 of 13 employees tested, as the contracts were not properly archived in the financial software used to electronically approve and archive employment contracts. As such, we could not verify the employees were paid their contracted rate for hours spent working on grant-related activities. This resulted in known questioned costs of $26,207. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "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). . . ." 2 CFR 200.334 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 or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 31 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) 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; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, not all employment contracts could be presented for audit nor could documentation be provided to support time charged to the grant. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were known questioned costs of $26,207 as identified in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contracts and certifications, as appropriate, are retained to support the amounts paid from Education Stabilization Fund program funds. INDIANA STATE BOARD OF ACCOUNTS 32 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response The alternative documentation provided was a snapshot from the administrator side of the financial software system; however, the original source document, which was the contract that was approved by the employee, the Superintendent of Schools, and the President of the School Board, was not provided to substantiate the amounts in the administrator side of the financial software system. We reaffirm our finding and will review the status of the finding during our next audit.
Finding Number 2022-003: Costs Incurred Outside Period of Performance (Significant Deficiency over Internal Control and Instances of Noncompliance – Period of Performance; Allowable Costs/Cost Principles) FALN Number 16.575 U.S. Department of Justice, Office of Victims of Crime – Crime Victim Assistance Criteria: 2022 Compliance Supplement and 2 CFR 200.403(h) stated that a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. Condition/Context: As a result of our audit procedures to evaluate the summary schedule of prior audit findings, we noted 1 sample where $788 of payroll expenditure incurred was charged to the program based on the pay date instead of the pay period incurred. Repeat Finding from Prior Year(s): Yes, Finding Number 2021-001 Cause and Effect: The Health System did not have proper controls in place to ensure only costs incurred in the period of performance were charged to the program, which resulted in costs outside of period of performance being charged to the program. Questioned Cost: None Recommendation: We recommend management review policies and procedures of the program to ensure the costs incurred are appropriately charged based on the contracts’ performance periods. Views of Responsible Officials and Planned Corrective Action: Management agrees with finding. The Health System will review and modify policies and procedures over the program to ensure management implements policies, procedures, and processes to make sure that the costs incurred are appropriately charged based on the contracts’ performance periods.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed/Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – Elementary and Secondary School Emergency Relief Fund Federal Award Number: S4250200012 (Year: 2020), S4250210012 (Year 2021), S425U210012 (Year: 2021), S425W210011 (Year 2021) Questioned Costs: $279,314 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,718,412.45 were expended and reported on the City of Thomasville Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state that “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations… for the acquisition of property or services required under a Federal award or subaward…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that “retention” bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS they were not employees of the School District and contract provisions requiring the individuals to remain employed by the companies and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $60,315.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $60,315.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District’s policies and procedures. Using the population being sampled, which totaled $329,101.23, we project the likely questioned costs to be approximately $279,314.22. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strain and shortages and GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed/Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – Elementary and Secondary School Emergency Relief Fund Federal Award Number: S4250200012 (Year: 2020), S4250210012 (Year 2021), S425U210012 (Year: 2021), S425W210011 (Year 2021) Questioned Costs: $279,314 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,718,412.45 were expended and reported on the City of Thomasville Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state that “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations… for the acquisition of property or services required under a Federal award or subaward…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that “retention” bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS they were not employees of the School District and contract provisions requiring the individuals to remain employed by the companies and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $60,315.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $60,315.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District’s policies and procedures. Using the population being sampled, which totaled $329,101.23, we project the likely questioned costs to be approximately $279,314.22. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strain and shortages and GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed/Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – Elementary and Secondary School Emergency Relief Fund Federal Award Number: S4250200012 (Year: 2020), S4250210012 (Year 2021), S425U210012 (Year: 2021), S425W210011 (Year 2021) Questioned Costs: $279,314 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,718,412.45 were expended and reported on the City of Thomasville Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state that “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations… for the acquisition of property or services required under a Federal award or subaward…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that “retention” bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS they were not employees of the School District and contract provisions requiring the individuals to remain employed by the companies and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $60,315.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $60,315.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District’s policies and procedures. Using the population being sampled, which totaled $329,101.23, we project the likely questioned costs to be approximately $279,314.22. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strain and shortages and GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed/Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – Elementary and Secondary School Emergency Relief Fund Federal Award Number: S4250200012 (Year: 2020), S4250210012 (Year 2021), S425U210012 (Year: 2021), S425W210011 (Year 2021) Questioned Costs: $279,314 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,718,412.45 were expended and reported on the City of Thomasville Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state that “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations… for the acquisition of property or services required under a Federal award or subaward…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that “retention” bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS they were not employees of the School District and contract provisions requiring the individuals to remain employed by the companies and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $60,315.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $60,315.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District’s policies and procedures. Using the population being sampled, which totaled $329,101.23, we project the likely questioned costs to be approximately $279,314.22. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strain and shortages and GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
2 CFR § 3474.1 gives regulatory effect to the U.S. Department of Education for 2 CFR § 200.403 (a), which requires, except where otherwise authorized by statute, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Costs incurred under the Education Stabilization Fund (ESF) must be consistent with the purpose of the ESF which is to prevent, prepare for, and respond to COVID-19. For fiscal year 2022, one of the 64 tested expenditures paid out of the #84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) Fund totaling $239,173 was determined to not be allowable based on the ESF grant's guidelines and 2 CFR § 200.403 (a). This expenditures was: Pursuant to ORC §3302.10, districts are subject to an academic distress commission after receiving an overall grade of F or an overall rating of less than two stars on the Ohio School Report Cards for three consecutive years. Youngstown met these criteria in FY 2016. The District’s academic distress commission appointed a chief executive officer with complete operational, managerial, and instructional control of the district. Among other duties, this included contracting for services and modifying policies and procedures previously established. Under his authority, the CEO approved the unallowable expenditure noted above. The noncompliance has resulted in a questioned cost in the amount of $239,173. The District should implement additional procedures to help ensure expenditures charged to the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) Fund are necessary and reasonable for the grant program in accordance with 2 CFR § 200.403 (a) and allowable under the grant guidelines. Failure to do so could result in reduced future federal funding or the requirement to repay the Ohio Department of Education.
FA 2022-001 Improve Controls over Employee Compensation Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 (Year: 2022) Questioned Costs: $41,310 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: Auditors reviewed salaries for a randomly selected sample of employees and those employees who were paid over the individually significant item threshold for CNC. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. Testing of these salaries revealed that the former School Food Service Director’s salary was paid from Child Nutrition Cluster funds while the employee had moved to another position within the School District and did not perform Child Nutrition Cluster services. Questioned Costs: Known questioned costs of $41,310 were identified for salaries charged to the Child Nutrition Cluster in error. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The former Child Nutrition Director changed to a different position and was not correctly removed from the Child Nutrition Cluster payroll for the year under review. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with the Child Nutrition Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Child Nutrition Cluster fund as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Child Nutrition Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Employee Compensation Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 (Year: 2022) Questioned Costs: $41,310 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: Auditors reviewed salaries for a randomly selected sample of employees and those employees who were paid over the individually significant item threshold for CNC. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. Testing of these salaries revealed that the former School Food Service Director’s salary was paid from Child Nutrition Cluster funds while the employee had moved to another position within the School District and did not perform Child Nutrition Cluster services. Questioned Costs: Known questioned costs of $41,310 were identified for salaries charged to the Child Nutrition Cluster in error. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The former Child Nutrition Director changed to a different position and was not correctly removed from the Child Nutrition Cluster payroll for the year under review. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with the Child Nutrition Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Child Nutrition Cluster fund as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Child Nutrition Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Employee Compensation Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 (Year: 2022) Questioned Costs: $41,310 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: Auditors reviewed salaries for a randomly selected sample of employees and those employees who were paid over the individually significant item threshold for CNC. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. Testing of these salaries revealed that the former School Food Service Director’s salary was paid from Child Nutrition Cluster funds while the employee had moved to another position within the School District and did not perform Child Nutrition Cluster services. Questioned Costs: Known questioned costs of $41,310 were identified for salaries charged to the Child Nutrition Cluster in error. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The former Child Nutrition Director changed to a different position and was not correctly removed from the Child Nutrition Cluster payroll for the year under review. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with the Child Nutrition Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Child Nutrition Cluster fund as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Child Nutrition Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Employee Compensation Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 (Year: 2022) Questioned Costs: $41,310 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: Auditors reviewed salaries for a randomly selected sample of employees and those employees who were paid over the individually significant item threshold for CNC. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. Testing of these salaries revealed that the former School Food Service Director’s salary was paid from Child Nutrition Cluster funds while the employee had moved to another position within the School District and did not perform Child Nutrition Cluster services. Questioned Costs: Known questioned costs of $41,310 were identified for salaries charged to the Child Nutrition Cluster in error. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The former Child Nutrition Director changed to a different position and was not correctly removed from the Child Nutrition Cluster payroll for the year under review. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with the Child Nutrition Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Child Nutrition Cluster fund as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Child Nutrition Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
Period of Performance Finding Type: Material Weakness in Internal control over compliance and noncompliance Federal Program Title and AL Number: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (93.323). Criteria: According to 2 CFR Section 200.403 (g) and (h), costs must be adequately documented and incurred during the approved budget period. Additionally, per 2 CFR Section 200.334, 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. Condition and context: During our period of performance testing, management was unable to provide documentation to support one out of the eight statistically valid samples. Cause: The Organization did not have controls in place to maintain documentation of project expenses. Effect: Failure to obtain sufficient support for payments made could result in inappropriate costs charged to the federal award during the approved budget period. Questioned Costs: $77,862 (known). $174,680 (likely). Repeat finding: No. Recommendation: We recommend that the Organization implement procedures to maintain adequate records. Views of responsible officials and planned corrective actions: Management concurs with the finding and recommendation. Please see the attached corrective action plan.
Period of Performance Finding Type: Material Weakness in Internal control over compliance and noncompliance Federal Program Title and AL Number: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (93.323). Criteria: According to 2 CFR Section 200.403 (g) and (h), costs must be adequately documented and incurred during the approved budget period. Additionally, per 2 CFR Section 200.334, 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. Condition and context: During our period of performance testing, management was unable to provide documentation to support one out of the eight statistically valid samples. Cause: The Organization did not have controls in place to maintain documentation of project expenses. Effect: Failure to obtain sufficient support for payments made could result in inappropriate costs charged to the federal award during the approved budget period. Questioned Costs: $77,862 (known). $174,680 (likely). Repeat finding: No. Recommendation: We recommend that the Organization implement procedures to maintain adequate records. Views of responsible officials and planned corrective actions: Management concurs with the finding and recommendation. Please see the attached corrective action plan.
Period of Performance Finding Type: Material Weakness in Internal control over compliance and noncompliance Federal Program Title and AL Number: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (93.323). Criteria: According to 2 CFR Section 200.403 (g) and (h), costs must be adequately documented and incurred during the approved budget period. Additionally, per 2 CFR Section 200.334, 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. Condition and context: During our period of performance testing, management was unable to provide documentation to support one out of the eight statistically valid samples. Cause: The Organization did not have controls in place to maintain documentation of project expenses. Effect: Failure to obtain sufficient support for payments made could result in inappropriate costs charged to the federal award during the approved budget period. Questioned Costs: $77,862 (known). $174,680 (likely). Repeat finding: No. Recommendation: We recommend that the Organization implement procedures to maintain adequate records. Views of responsible officials and planned corrective actions: Management concurs with the finding and recommendation. Please see the attached corrective action plan.
Period of Performance Finding Type: Material Weakness in Internal control over compliance and noncompliance Federal Program Title and AL Number: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (93.323). Criteria: According to 2 CFR Section 200.403 (g) and (h), costs must be adequately documented and incurred during the approved budget period. Additionally, per 2 CFR Section 200.334, 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. Condition and context: During our period of performance testing, management was unable to provide documentation to support one out of the eight statistically valid samples. Cause: The Organization did not have controls in place to maintain documentation of project expenses. Effect: Failure to obtain sufficient support for payments made could result in inappropriate costs charged to the federal award during the approved budget period. Questioned Costs: $77,862 (known). $174,680 (likely). Repeat finding: No. Recommendation: We recommend that the Organization implement procedures to maintain adequate records. Views of responsible officials and planned corrective actions: Management concurs with the finding and recommendation. Please see the attached corrective action plan.
Period of Performance Finding Type: Material Weakness in Internal control over compliance and noncompliance Federal Program Title and AL Number: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (93.323). Criteria: According to 2 CFR Section 200.403 (g) and (h), costs must be adequately documented and incurred during the approved budget period. Additionally, per 2 CFR Section 200.334, 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. Condition and context: During our period of performance testing, management was unable to provide documentation to support one out of the eight statistically valid samples. Cause: The Organization did not have controls in place to maintain documentation of project expenses. Effect: Failure to obtain sufficient support for payments made could result in inappropriate costs charged to the federal award during the approved budget period. Questioned Costs: $77,862 (known). $174,680 (likely). Repeat finding: No. Recommendation: We recommend that the Organization implement procedures to maintain adequate records. Views of responsible officials and planned corrective actions: Management concurs with the finding and recommendation. Please see the attached corrective action plan.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
Finding Number 2022-007 Prior Year Finding Number N/A Compliance Requirement: Period of Performance Program: U.S. Department of Education Special Education-Grants for Infants and Families ALN #: 84.181A Award #: 210299, 220134 Award Period: 07/01/2020 – 09/30/2021 07/01/2021 - 09/30/2022 Criteria – A non-federal entity may charge to the Federal award allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award, only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency. A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition – We sampled and selected 7 out of 21 expenditures and noted 3 expenditures were not properly reviewed. For compliance with period of performance requirements; the three transactions were incurred before the beginning of the period of performance for the respective grants. Questioned Costs – Not determinable. Context – This is a condition identified per review of the School System compliance with the specified requirements using a statistically valid sample. The known amount of the 3 transactions incurred outside the grant period amounted to $16,302. The total amount of the 7 samples selected was $52,039. The total amount of the 21 expenditures was $229,430. Effect – The School System is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – The School System does not appear to have adequate policies and procedures in place to ensure compliance with the required period of performance stipulations. Recommendation – We recommend that the School System strengthen its processes with respect to setting up and charging expenditures between various grant awards. We also recommend that DOE enhance its review process to properly determine the activities of each grant relative to the appropriate period of performance. Views of Responsible Officials – The School System concurs with the auditor’s findings and recommendations. The Infants and Toddlers Supervisor will conduct monthly reviews of outstanding purchase orders in Oracle, addressing issues promptly with the Business Operation Officer/Financial Analyst. The planned corrective actions are presented in the School System’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number 2022-007 Prior Year Finding Number N/A Compliance Requirement: Period of Performance Program: U.S. Department of Education Special Education-Grants for Infants and Families ALN #: 84.181A Award #: 210299, 220134 Award Period: 07/01/2020 – 09/30/2021 07/01/2021 - 09/30/2022 Criteria – A non-federal entity may charge to the Federal award allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award, only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency. A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition – We sampled and selected 7 out of 21 expenditures and noted 3 expenditures were not properly reviewed. For compliance with period of performance requirements; the three transactions were incurred before the beginning of the period of performance for the respective grants. Questioned Costs – Not determinable. Context – This is a condition identified per review of the School System compliance with the specified requirements using a statistically valid sample. The known amount of the 3 transactions incurred outside the grant period amounted to $16,302. The total amount of the 7 samples selected was $52,039. The total amount of the 21 expenditures was $229,430. Effect – The School System is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – The School System does not appear to have adequate policies and procedures in place to ensure compliance with the required period of performance stipulations. Recommendation – We recommend that the School System strengthen its processes with respect to setting up and charging expenditures between various grant awards. We also recommend that DOE enhance its review process to properly determine the activities of each grant relative to the appropriate period of performance. Views of Responsible Officials – The School System concurs with the auditor’s findings and recommendations. The Infants and Toddlers Supervisor will conduct monthly reviews of outstanding purchase orders in Oracle, addressing issues promptly with the Business Operation Officer/Financial Analyst. The planned corrective actions are presented in the School System’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
2022-007 – TITLE I – INADEQUATE SUPPORTING DOCUMENTATION– ALN 84.010 – SIGNIFICANT DEFICIENCY & OTHER NONCOMPLIANCE Condition We were unable to verify whether 6 of 60 expenditures totaling $7,591 were for costs allowed under the Title I grant. When projected against the total population of $1,628,283, the total projected error is $15,939. Effect Williston Basin Public School District No. 7 may have charged unallowable expenditures to the grant program. Cause Williston Basin Public School District No. 7 did not maintain support documentation for all expenditures charged to the Title I grant. In addition, there was no evidence of approval on these transactions. Criteria Uniform Guidance 2 CFR 200.303(a) states “The non-Federal entity must 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).” Uniform Guidance 2 CFR 200.403(g) requires costs to be adequately documented. "Standards for Internal Control in the Federal Government" (Green Book) requires management to design, implement, and operate internal controls to achieve its objectives related to operations, reporting, and compliance. Management is to design appropriate types of control activities for the entity's internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system. Questioned Costs $7,591 Repeat Finding No. Recommendation We recommend Williston Basin Public School District No. 7 maintain support to ensure all expenditures charged to the Title I grant were approved and were for costs allowed under the grant. Williston Basin Public School District No. 7’s Response See Corrective Action Plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
Finding 2022-003Material weakness in internal controls over compliance for allowable activities and costs and material non-compliance inthe Coronavirus State and Local Fiscal Recovery Fund program.Federal Agencies: Department of Justice; Department of the TreasuryProgram Titles: Crime Victim Assistance; Coronavirus State and Local Fiscal Recovery FundAssistance Listing Numbers: 16.575; 21.027Award Numbers: 22-31219-018, 22-31310-140, 22-31219-019, F19-31219-553, 8152, DA-239Award Periods: VariousCriteriaCharges to federal awards must meet the requirements of Title 2 U.S. Code of Federal Regulations Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E - Cost Principles.Condition/Context for EvaluationDuring our audit we identified that a total of 19 of 142 transactions (79 non-payroll transactions and 63 for payrolltransactions) tested for allowable costs and activities did not meet the requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsSubpart E - Cost Principles. Below is a disaggregation of the exceptions identified:- Thirteen of the non-payroll transactions tested did not have documentation available to support the allocationof the expense to the program in accordance with 2 CFR 200.405.- Three of the non-payroll transactions tested did not meet the reasonable and necessary criteria of 2 CFR200.403.- Two of the payroll transactions tested was charged to the federal award based upon allocations determinedbefore services were performed with no process to identify significant changes in the corresponding workactivity in accordance with 2 CFR 200.430(i).- Two of the transactions tested did not have adequate documentation to support the item of cost in accordancewith the criteria at 200.403(g).- One of the transactions tested the cost incurred represented a reimbursement for costs in excess of theallowable amount per the Organization?s policies and procedures and did not meet the criteria of 2 CFR 200.403.Our sample was not a statistical sample.Effect or Potential EffectThe Organization charged costs to the federal awards that were unallowable. Questioned CostsActual questioned costs identified during the audit totaled the amounts below by award:Assistance Pass-Through KnownListing Pass-Through Award QuestionedNumber Funder Number Costs21.027 State of Oregon Department of Administrative Services 8152 $ 1921027 King County Regional Homelessness Authority DA-239 $ 3,808CauseInternal controls were not operating effectively to ensure only allowable costs were charged to the federal awards.Repeat FindingNot applicable.RecommendationWe recommend that the Organization provide additional training to employees to ensure that controls operate effectivelyso that only allowable costs are authorized to be charged to federal awards and that record retention controls arestrengthened to ensure documentation and policies are retained to support the distribution of charges between projects.Views of Responsible Officials of AuditeeManagement agrees with the finding and has provided the accompanying corrective action plan.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, NationalSchool Lunch Program, COVID-19 - National School Lunch ProgramAssistance Listings Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation had not developed nor implemented internal controls over transactionspaid from the Child Nutrition Cluster funds to ensure that the payment was an allowable cost for the benefitof the food service program.Additionally, the School Corporation paid food service employees that worked more than 5.25 hoursa day on a biweekly basis with payments that continued into the summer. In order to do this, an employee'spay was annualized based on the expected number of days worked and then divided by 26. Each employeewas required to complete a timesheet every two weeks, which was approved by their supervisor, to supportthe time worked during the school year. Four of the fourteen paychecks selected for testing had errors.Two of the paychecks did not have the required timesheets, and two of the paychecks did not havetimesheets that reflected time worked to adequately support the amount paid to the employee.The lack of internal controls was a systemic issue for all disbursements throughout the audit period.The noncompliance was isolated to payroll disbursements for the school year ended June 30, 2021.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for Documentation of Personnel Expenses(1) Charges to Federal awards for salaries and wages must be based on records thataccurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonableassurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated bythe non-Federal entity, not exceeding 100% of compensated activities . . .(vii) Support the distribution of the employee's salary or wages among specificactivities or cost objectives if the employee works on more than one Federal award; aFederal award and non-Federal award; an indirect cost activity and a direct costactivity; two or more indirect activities which are allocated using different allocationbases; or an unallowable activity and a direct or indirect cost activity. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Allowable Costs/Cost Principles compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003Subject: Child Nutrition Cluster - Allowable Costs/Cost PrinciplesFederal Agency: Department of AgricultureFederal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, NationalSchool Lunch Program, COVID-19 - National School Lunch ProgramAssistance Listings Numbers: 10.553, 10.555Federal Award Numbers and Years (or Other Identifying Numbers): FY2021, FY2022Pass-Through Entity: Indiana Department of EducationCompliance Requirement: Allowable Costs/Cost PrinciplesAudit Findings: Material Weakness, Other MattersCondition and ContextAn effective internal control system was not in place at the School Corporation to ensure compliancewith requirements related to the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.The School Corporation had not developed nor implemented internal controls over transactionspaid from the Child Nutrition Cluster funds to ensure that the payment was an allowable cost for the benefitof the food service program.Additionally, the School Corporation paid food service employees that worked more than 5.25 hoursa day on a biweekly basis with payments that continued into the summer. In order to do this, an employee'spay was annualized based on the expected number of days worked and then divided by 26. Each employeewas required to complete a timesheet every two weeks, which was approved by their supervisor, to supportthe time worked during the school year. Four of the fourteen paychecks selected for testing had errors.Two of the paychecks did not have the required timesheets, and two of the paychecks did not havetimesheets that reflected time worked to adequately support the amount paid to the employee.The lack of internal controls was a systemic issue for all disbursements throughout the audit period.The noncompliance was isolated to payroll disbursements for the school year ended June 30, 2021.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.403 states in part:"Except where otherwise authorized by statute, costs must meet the following general criteriain order to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federalaward as to types or amount of cost items. . . .(g) Be adequately documented. . . ."2 CFR 200.430(i) states in part:"Standards for Documentation of Personnel Expenses(1) Charges to Federal awards for salaries and wages must be based on records thataccurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonableassurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity;(iii) Reasonably reflect the total activity for which the employee is compensated bythe non-Federal entity, not exceeding 100% of compensated activities . . .(vii) Support the distribution of the employee's salary or wages among specificactivities or cost objectives if the employee works on more than one Federal award; aFederal award and non-Federal award; an indirect cost activity and a direct costactivity; two or more indirect activities which are allocated using different allocationbases; or an unallowable activity and a direct or indirect cost activity. . . ."CauseManagement had not developed a system of internal controls that would have ensured compliancewith the Allowable Costs/Cost Principles compliance requirement.EffectThe failure to establish an effective internal control system enabled material noncompliance to goundetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement could result in the loss of future federal funds to the School Corporation.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that the School Corporation's management establish internal controls to ensurecompliance and comply with the grant agreement and the Allowable Costs/Cost Principles compliancerequirement.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.