Allowable Costs – Ryan White Part B HIV Care Formula Grants – Federal Assistance Listing Number 93.917; Award Period: Year ended June 30, 2023; Pass-through entity names: Virginia Department of Health and Northern Virginia Regional Commission. Allowable Costs – Housing Opportunities For Persons With AIDS – Federal Assistance Listing Number 14.241; Award Period: Year ended June 30, 2023. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Organization allowed payroll related costs to be submitted for reimbursement under the grant for time that did not match approved timesheets. This is not in compliance with program allowable cost requirements. Cause: There is a lack of review of payroll registers to compare to timesheets to ensure the proper number of hours are submitted for reimbursement. Effect: The Organization billed the incorrect amount of payroll and related costs to the federal program, resulting in questioned costs. Questioned Costs: The amount of payroll and related costs discovered to be incorrect. Context: Timesheets of numerous employees were found to not match the hours used in calculating payroll to be submitted for reimbursement to the grant. Recommendation: We recommend the Organization implement a process to first record time into the payroll system based on timesheets, then further implement a review process to compare the payroll register hours to the approved timesheets. Views of Responsible Officials: The Organization would like to note that the repeat finding is a result of the prior audit being completed near the end of the year ended June 30, 2023. The auditee agrees with this recommendation and has taken the necessary steps to prevent a re-occurrence. Lack of timesheets and pay rates resulted in the inability to show that time and payroll were accurately recorded. This resulted in additional procedures during the audit process being performed to obtain reasonable assurance over these balances.
Allowable Costs – Ryan White Part B HIV Care Formula Grants – Federal Assistance Listing Number 93.917; Award Period: Year ended June 30, 2023; Pass-through entity names: Virginia Department of Health and Northern Virginia Regional Commission. Allowable Costs – Housing Opportunities For Persons With AIDS – Federal Assistance Listing Number 14.241; Award Period: Year ended June 30, 2023. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Organization allowed payroll related costs to be submitted for reimbursement under the grant for time that did not match approved timesheets. This is not in compliance with program allowable cost requirements. Cause: There is a lack of review of payroll registers to compare to timesheets to ensure the proper number of hours are submitted for reimbursement. Effect: The Organization billed the incorrect amount of payroll and related costs to the federal program, resulting in questioned costs. Questioned Costs: The amount of payroll and related costs discovered to be incorrect. Context: Timesheets of numerous employees were found to not match the hours used in calculating payroll to be submitted for reimbursement to the grant. Recommendation: We recommend the Organization implement a process to first record time into the payroll system based on timesheets, then further implement a review process to compare the payroll register hours to the approved timesheets. Views of Responsible Officials: The Organization would like to note that the repeat finding is a result of the prior audit being completed near the end of the year ended June 30, 2023. The auditee agrees with this recommendation and has taken the necessary steps to prevent a re-occurrence. Lack of timesheets and pay rates resulted in the inability to show that time and payroll were accurately recorded. This resulted in additional procedures during the audit process being performed to obtain reasonable assurance over these balances.
Allowable Costs – Ryan White Part B HIV Care Formula Grants – Federal Assistance Listing Number 93.917; Award Period: Year ended June 30, 2023; Pass-through entity names: Virginia Department of Health and Northern Virginia Regional Commission. Allowable Costs – Housing Opportunities For Persons With AIDS – Federal Assistance Listing Number 14.241; Award Period: Year ended June 30, 2023. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Organization allowed payroll related costs to be submitted for reimbursement under the grant for time that did not match approved timesheets. This is not in compliance with program allowable cost requirements. Cause: There is a lack of review of payroll registers to compare to timesheets to ensure the proper number of hours are submitted for reimbursement. Effect: The Organization billed the incorrect amount of payroll and related costs to the federal program, resulting in questioned costs. Questioned Costs: The amount of payroll and related costs discovered to be incorrect. Context: Timesheets of numerous employees were found to not match the hours used in calculating payroll to be submitted for reimbursement to the grant. Recommendation: We recommend the Organization implement a process to first record time into the payroll system based on timesheets, then further implement a review process to compare the payroll register hours to the approved timesheets. Views of Responsible Officials: The Organization would like to note that the repeat finding is a result of the prior audit being completed near the end of the year ended June 30, 2023. The auditee agrees with this recommendation and has taken the necessary steps to prevent a re-occurrence. Lack of timesheets and pay rates resulted in the inability to show that time and payroll were accurately recorded. This resulted in additional procedures during the audit process being performed to obtain reasonable assurance over these balances.
Allowable Costs – Ryan White Part B HIV Care Formula Grants – Federal Assistance Listing Number 93.917; Award Period: Year ended June 30, 2023; Pass-through entity names: Virginia Department of Health and Northern Virginia Regional Commission. Allowable Costs – Housing Opportunities For Persons With AIDS – Federal Assistance Listing Number 14.241; Award Period: Year ended June 30, 2023. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Organization allowed payroll related costs to be submitted for reimbursement under the grant for time that did not match approved timesheets. This is not in compliance with program allowable cost requirements. Cause: There is a lack of review of payroll registers to compare to timesheets to ensure the proper number of hours are submitted for reimbursement. Effect: The Organization billed the incorrect amount of payroll and related costs to the federal program, resulting in questioned costs. Questioned Costs: The amount of payroll and related costs discovered to be incorrect. Context: Timesheets of numerous employees were found to not match the hours used in calculating payroll to be submitted for reimbursement to the grant. Recommendation: We recommend the Organization implement a process to first record time into the payroll system based on timesheets, then further implement a review process to compare the payroll register hours to the approved timesheets. Views of Responsible Officials: The Organization would like to note that the repeat finding is a result of the prior audit being completed near the end of the year ended June 30, 2023. The auditee agrees with this recommendation and has taken the necessary steps to prevent a re-occurrence. Lack of timesheets and pay rates resulted in the inability to show that time and payroll were accurately recorded. This resulted in additional procedures during the audit process being performed to obtain reasonable assurance over these balances.
Allowable Costs – Ryan White Part B HIV Care Formula Grants – Federal Assistance Listing Number 93.917; Award Period: Year ended June 30, 2023; Pass-through entity names: Virginia Department of Health and Northern Virginia Regional Commission. Allowable Costs – Housing Opportunities For Persons With AIDS – Federal Assistance Listing Number 14.241; Award Period: Year ended June 30, 2023. Criteria: Per 2 CFR §200.430(i), non-federal entities are required to maintain records that accurately reflect work performed. These records must be supported by a system of internal control which provides reasonable assurance that the time being charged is accurate, allowable and properly allocated, are incorporated in the official records, such as payroll records, reasonably reflect the employee’s total activity, provide a time or percentage breakdown on all activities, both federally and non-federally funded, for the employee, and comply with the non-federal entity’s pre-established accounting practices and procedures. Condition: The Organization allowed payroll related costs to be submitted for reimbursement under the grant for time that did not match approved timesheets. This is not in compliance with program allowable cost requirements. Cause: There is a lack of review of payroll registers to compare to timesheets to ensure the proper number of hours are submitted for reimbursement. Effect: The Organization billed the incorrect amount of payroll and related costs to the federal program, resulting in questioned costs. Questioned Costs: The amount of payroll and related costs discovered to be incorrect. Context: Timesheets of numerous employees were found to not match the hours used in calculating payroll to be submitted for reimbursement to the grant. Recommendation: We recommend the Organization implement a process to first record time into the payroll system based on timesheets, then further implement a review process to compare the payroll register hours to the approved timesheets. Views of Responsible Officials: The Organization would like to note that the repeat finding is a result of the prior audit being completed near the end of the year ended June 30, 2023. The auditee agrees with this recommendation and has taken the necessary steps to prevent a re-occurrence. Lack of timesheets and pay rates resulted in the inability to show that time and payroll were accurately recorded. This resulted in additional procedures during the audit process being performed to obtain reasonable assurance over these balances.
Lack of Documentation to Support Distribution of Wages (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: COVID-19 Education Stabilization Fund Assistance Listing Number(s): 84.425U Passed-through Identification: 20220338 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the District, as a recipient of Federal funds, must 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. In addition, under 2 CFR 200.430, it states that charges to the federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) be incorporated into the official records of the non-Federal entity, (3) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, and (4) 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 ward or a federal award and non-Federal award. Condition: During our review of payroll charged to the grant, we noted one employee who did not have documentation to support the distribution of the employee’s time spent on grant activities. Cause: Administrative oversight and lack of training of requirements. Effect: The District did not have adequate documentation to support the distribution of the employee’s wages paid using grant funds. Questioned Costs: $47,216 Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that documentation be retained to support the distribution of salaries and wages for all employees paid using grant funds. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
Finding #2023-003 – Significant Deficiency – Activities Allowed or Unallowed, Allowable Cost Principles 93.558 Temporary Assistance for Needy Families – Out of School Time Program 93.600 Head Start Lack of Supporting Documentation for Disbursements Criteria Costs charged to federal grants must meet the provisions of the standards for documentation of expenses contained in 2 CFR 200.430(i)(1) which requires that charges to federal awards for disbursements must be based on records that accurately reflect actual costs incurred. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supporting invoices to be maintained and reviewed prior to payment. Condition During the audit, it was identified that supporting invoices could not be provided for three nonpayroll related disbursements. The population sampled was all nonpayroll related disbursements. Total number of selections tested was sixty-five, which comprised 2% of the total population. Cause This significant deficiency may have resulted from inadequate procedures for the retention of supporting documentation or a lack of oversight and reconciliation processes in the disbursement cycle. The failure to accurately reconcile recorded amounts to the supporting invoices further indicates a breakdown in internal controls. Effects The absence of supporting invoices and discrepancies between recorded amounts and invoice amounts create a risk of unauthorized or unsupported disbursements. This weakens the Organization’s ability to demonstrate compliance with federal grant requirements and increases the likelihood of disallowed costs or questioned costs in future audits. Failure to adequately control disbursements may also expose the client to potential financial misstatements or fraud. Questions Costs In total, $141 of expenses could not be supported. Perspective This audit finding is systematic. Statistical Sample The sample was a statistically valid sample. Repeat Finding This audit finding is not a repeat finding. Recommendation We recommend that the Organization strengthen its internal control procedures to ensure that all disbursement transactions are properly supported by invoices or other appropriate documentation before they are recorded and paid. The client should implement a regular reconciliation process to ensure that recorded amounts agree with supporting documentation. Additionally, management should establish policies for the retention of documentation to ensure it is readily available for audit and compliance purposes. Views of Responsible Officials Management agrees with the finding. The Organization is in the process of updating its procedures to ensure that all disbursements are supported by invoices and that recorded amounts are regularly reconciled with supporting documentation. Additionally, the Organization will implement a formal policy for document retention to ensure audit readiness.
Finding #2023-003 – Significant Deficiency – Activities Allowed or Unallowed, Allowable Cost Principles 93.558 Temporary Assistance for Needy Families – Out of School Time Program 93.600 Head Start Lack of Supporting Documentation for Disbursements Criteria Costs charged to federal grants must meet the provisions of the standards for documentation of expenses contained in 2 CFR 200.430(i)(1) which requires that charges to federal awards for disbursements must be based on records that accurately reflect actual costs incurred. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supporting invoices to be maintained and reviewed prior to payment. Condition During the audit, it was identified that supporting invoices could not be provided for three nonpayroll related disbursements. The population sampled was all nonpayroll related disbursements. Total number of selections tested was sixty-five, which comprised 2% of the total population. Cause This significant deficiency may have resulted from inadequate procedures for the retention of supporting documentation or a lack of oversight and reconciliation processes in the disbursement cycle. The failure to accurately reconcile recorded amounts to the supporting invoices further indicates a breakdown in internal controls. Effects The absence of supporting invoices and discrepancies between recorded amounts and invoice amounts create a risk of unauthorized or unsupported disbursements. This weakens the Organization’s ability to demonstrate compliance with federal grant requirements and increases the likelihood of disallowed costs or questioned costs in future audits. Failure to adequately control disbursements may also expose the client to potential financial misstatements or fraud. Questions Costs In total, $141 of expenses could not be supported. Perspective This audit finding is systematic. Statistical Sample The sample was a statistically valid sample. Repeat Finding This audit finding is not a repeat finding. Recommendation We recommend that the Organization strengthen its internal control procedures to ensure that all disbursement transactions are properly supported by invoices or other appropriate documentation before they are recorded and paid. The client should implement a regular reconciliation process to ensure that recorded amounts agree with supporting documentation. Additionally, management should establish policies for the retention of documentation to ensure it is readily available for audit and compliance purposes. Views of Responsible Officials Management agrees with the finding. The Organization is in the process of updating its procedures to ensure that all disbursements are supported by invoices and that recorded amounts are regularly reconciled with supporting documentation. Additionally, the Organization will implement a formal policy for document retention to ensure audit readiness.
Statement of condition: The allocation of salaries and wages charged to the Education Stabilization program for employees tested was not accurate per supporting documentation of time certifications. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.430(g)(1)(i) requires that salaries and wages charged to federal awards must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The School’s time certifications meet this regulation but these time certifications do not support the allocations of pay for these employees. Cause of condition: Procedures ae in place for personnel to review the accuracy of the time certification and to ensure accuracy in the recording of how salaries and wages are allocated in accordance wit the time certifications. However, there was a breakdown in this control. Effect of condition: During testing, it was noted that time certifications for employees who were paid with Education Stabilization funds was not supported by time certifications which state actual time worked by program for each employee. Context: A sample of 40 employees paid wit Education Stabilization funds were selected for testing. The audit testing found that 8 of the employees’ time certifications indicated that they worked less hours in the program than what was actually charged to the program. This resulted in questioned costs of $1,704. Recommendation: To ensure that salaries and wages charged to federal award programs are supported by time certifications, a review of completed time certifications should be compared to salaries and wages recorded to the program. Views of responsible officials and planned corrective actions: Management agrees with this find and will review time certifications in comparison to salaries and wages recorded to the program. See 2023-004 for management’s detailed action plan, timeline, and the responsible parties for all Education Stabilization Fund findings.
Statement of condition: Time certifications and timesheets that support salaries and wages charged to the Education Stabilization program showed no evidence of review and approval performed. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.430(g)(1)(i) requires that salaries and wages charged to federal awards must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The School’s control of reviewing and approving of time certifications and timesheets and providing evidence of this review and approval through signature of appropriate personnel meet this regulation but a time certification showed no evidence of review and approval. Cause of condition: Procedures are in place for personnel to review the accuracy of the time certification and to ensure accuracy in the recording of how salaries and wages are allocated in accordance with the time certifications. However, there was a breakdown in this control. Effect of condition: During testing, it was noted that time certifications for employees paid with Education Stabilization funds did not have evidence that review and approval was performed. Context: A sample of 40 employees paid with Education Stabilization funds were selected for testing. The audit testing found that 1 employee’s time certification was not signed by the employee and had no evidence of review and approval from a supervisor. Recommendation: To ensure the accuracy of time certifications and that salaries and wages charged to federal award programs are accurate, all time certifications should be signed by the employee and reviewed and approved by the appropriate School personnel. This review and approval should be evidenced by the School personnel’s signature. Views of responsible officials and planned corrective actions: Management agrees with this finding and will ensure all time certifications are signed by employees and reviewed and approved by the appropriate School personnel. See 2023-004 for management’s detailed action plan, timeline, and the responsible parties for all Education Stabilization Fund findings.
Statement of condition: Contracts are not maintained for employees. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.430(g)(1)(i) requires that salaries and wages charged to federal awards must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The School’s control of reviewing and approving of time certifications and timesheets and providing evidence of this review and approval through signature of appropriate personnel meet this regulation, however, without a contract to support an employee’s pay, the allocation of pay to be charged to the program is unable to be determined. Cause of condition: Management has not kept or maintained a copy of an employee’s contract. Effect of condition: Due to management’s inability to provide a copy of an employee’s contract, we were unable to determine whether the employee’s pay was properly allocated to the program based on the employee’s completed time certification. Context: A sample of 40 employees paid with Education Stabilization funds were selected for testing. Management was unable to provide a copy of 1 employee’s contract. This resulted in $477 in questioned costs. Recommendation: To ensure the accuracy of salaries and wages that are allocated to federal award programs, management should maintain a copy of all employee contracts. Views of responsible officials and planned corrective actions: Management agrees with this finding and will ensue copies of all employee contracts are maintained. See 2023-004 for management’s detailed action plan, timeline, and the responsible parties for all Education Stabilization Fund findings.
Statement of condition: The allocation of salaries and wages charged to the Education Stabilization program for employees tested was not accurate per supporting documentation of time certifications. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.430(g)(1)(i) requires that salaries and wages charged to federal awards must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The School’s time certifications meet this regulation but these time certifications do not support the allocations of pay for these employees. Cause of condition: Procedures ae in place for personnel to review the accuracy of the time certification and to ensure accuracy in the recording of how salaries and wages are allocated in accordance wit the time certifications. However, there was a breakdown in this control. Effect of condition: During testing, it was noted that time certifications for employees who were paid with Education Stabilization funds was not supported by time certifications which state actual time worked by program for each employee. Context: A sample of 40 employees paid wit Education Stabilization funds were selected for testing. The audit testing found that 8 of the employees’ time certifications indicated that they worked less hours in the program than what was actually charged to the program. This resulted in questioned costs of $1,704. Recommendation: To ensure that salaries and wages charged to federal award programs are supported by time certifications, a review of completed time certifications should be compared to salaries and wages recorded to the program. Views of responsible officials and planned corrective actions: Management agrees with this find and will review time certifications in comparison to salaries and wages recorded to the program. See 2023-004 for management’s detailed action plan, timeline, and the responsible parties for all Education Stabilization Fund findings.
Statement of condition: Time certifications and timesheets that support salaries and wages charged to the Education Stabilization program showed no evidence of review and approval performed. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.430(g)(1)(i) requires that salaries and wages charged to federal awards must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The School’s control of reviewing and approving of time certifications and timesheets and providing evidence of this review and approval through signature of appropriate personnel meet this regulation but a time certification showed no evidence of review and approval. Cause of condition: Procedures are in place for personnel to review the accuracy of the time certification and to ensure accuracy in the recording of how salaries and wages are allocated in accordance with the time certifications. However, there was a breakdown in this control. Effect of condition: During testing, it was noted that time certifications for employees paid with Education Stabilization funds did not have evidence that review and approval was performed. Context: A sample of 40 employees paid with Education Stabilization funds were selected for testing. The audit testing found that 1 employee’s time certification was not signed by the employee and had no evidence of review and approval from a supervisor. Recommendation: To ensure the accuracy of time certifications and that salaries and wages charged to federal award programs are accurate, all time certifications should be signed by the employee and reviewed and approved by the appropriate School personnel. This review and approval should be evidenced by the School personnel’s signature. Views of responsible officials and planned corrective actions: Management agrees with this finding and will ensure all time certifications are signed by employees and reviewed and approved by the appropriate School personnel. See 2023-004 for management’s detailed action plan, timeline, and the responsible parties for all Education Stabilization Fund findings.
Statement of condition: Contracts are not maintained for employees. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.430(g)(1)(i) requires that salaries and wages charged to federal awards must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The School’s control of reviewing and approving of time certifications and timesheets and providing evidence of this review and approval through signature of appropriate personnel meet this regulation, however, without a contract to support an employee’s pay, the allocation of pay to be charged to the program is unable to be determined. Cause of condition: Management has not kept or maintained a copy of an employee’s contract. Effect of condition: Due to management’s inability to provide a copy of an employee’s contract, we were unable to determine whether the employee’s pay was properly allocated to the program based on the employee’s completed time certification. Context: A sample of 40 employees paid with Education Stabilization funds were selected for testing. Management was unable to provide a copy of 1 employee’s contract. This resulted in $477 in questioned costs. Recommendation: To ensure the accuracy of salaries and wages that are allocated to federal award programs, management should maintain a copy of all employee contracts. Views of responsible officials and planned corrective actions: Management agrees with this finding and will ensue copies of all employee contracts are maintained. See 2023-004 for management’s detailed action plan, timeline, and the responsible parties for all Education Stabilization Fund findings.
Statement of condition: The allocation of salaries and wages charged to the Education Stabilization program for employees tested was not accurate per supporting documentation of time certifications. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.430(g)(1)(i) requires that salaries and wages charged to federal awards must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The School’s time certifications meet this regulation but these time certifications do not support the allocations of pay for these employees. Cause of condition: Procedures ae in place for personnel to review the accuracy of the time certification and to ensure accuracy in the recording of how salaries and wages are allocated in accordance wit the time certifications. However, there was a breakdown in this control. Effect of condition: During testing, it was noted that time certifications for employees who were paid with Education Stabilization funds was not supported by time certifications which state actual time worked by program for each employee. Context: A sample of 40 employees paid wit Education Stabilization funds were selected for testing. The audit testing found that 8 of the employees’ time certifications indicated that they worked less hours in the program than what was actually charged to the program. This resulted in questioned costs of $1,704. Recommendation: To ensure that salaries and wages charged to federal award programs are supported by time certifications, a review of completed time certifications should be compared to salaries and wages recorded to the program. Views of responsible officials and planned corrective actions: Management agrees with this find and will review time certifications in comparison to salaries and wages recorded to the program. See 2023-004 for management’s detailed action plan, timeline, and the responsible parties for all Education Stabilization Fund findings.
Statement of condition: Time certifications and timesheets that support salaries and wages charged to the Education Stabilization program showed no evidence of review and approval performed. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.430(g)(1)(i) requires that salaries and wages charged to federal awards must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The School’s control of reviewing and approving of time certifications and timesheets and providing evidence of this review and approval through signature of appropriate personnel meet this regulation but a time certification showed no evidence of review and approval. Cause of condition: Procedures are in place for personnel to review the accuracy of the time certification and to ensure accuracy in the recording of how salaries and wages are allocated in accordance with the time certifications. However, there was a breakdown in this control. Effect of condition: During testing, it was noted that time certifications for employees paid with Education Stabilization funds did not have evidence that review and approval was performed. Context: A sample of 40 employees paid with Education Stabilization funds were selected for testing. The audit testing found that 1 employee’s time certification was not signed by the employee and had no evidence of review and approval from a supervisor. Recommendation: To ensure the accuracy of time certifications and that salaries and wages charged to federal award programs are accurate, all time certifications should be signed by the employee and reviewed and approved by the appropriate School personnel. This review and approval should be evidenced by the School personnel’s signature. Views of responsible officials and planned corrective actions: Management agrees with this finding and will ensure all time certifications are signed by employees and reviewed and approved by the appropriate School personnel. See 2023-004 for management’s detailed action plan, timeline, and the responsible parties for all Education Stabilization Fund findings.
Statement of condition: Contracts are not maintained for employees. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.430(g)(1)(i) requires that salaries and wages charged to federal awards must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The School’s control of reviewing and approving of time certifications and timesheets and providing evidence of this review and approval through signature of appropriate personnel meet this regulation, however, without a contract to support an employee’s pay, the allocation of pay to be charged to the program is unable to be determined. Cause of condition: Management has not kept or maintained a copy of an employee’s contract. Effect of condition: Due to management’s inability to provide a copy of an employee’s contract, we were unable to determine whether the employee’s pay was properly allocated to the program based on the employee’s completed time certification. Context: A sample of 40 employees paid with Education Stabilization funds were selected for testing. Management was unable to provide a copy of 1 employee’s contract. This resulted in $477 in questioned costs. Recommendation: To ensure the accuracy of salaries and wages that are allocated to federal award programs, management should maintain a copy of all employee contracts. Views of responsible officials and planned corrective actions: Management agrees with this finding and will ensue copies of all employee contracts are maintained. See 2023-004 for management’s detailed action plan, timeline, and the responsible parties for all Education Stabilization Fund findings.
In accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates alone do not qualify as support for charges to Federal awards. For the year ended June 30, 2023, Unique – AIDS did not maintain support for salary based on work performed. Salary and wages were charged based on budget estimates. The salaries and wages are not charged based on actual work performed. Unique-AIDS is not in compliance with 2 CFR 200.430. No questioned costs reported. The context is a random sampling of the federal expenditures. This is not a repeat finding from the prior year. We recommend that Unique – AIDS establish a system to determine and document the time spent and amount charged to their programs.
In accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates alone do not qualify as support for charges to Federal awards. For the year ended June 30, 2023, Unique – AIDS did not maintain support for salary based on work performed. Salary and wages were charged based on budget estimates. The salaries and wages are not charged based on actual work performed. Unique-AIDS is not in compliance with 2 CFR 200.430. No questioned costs reported. The context is a random sampling of the federal expenditures. This is not a repeat finding from the prior year. We recommend that Unique – AIDS establish a system to determine and document the time spent and amount charged to their programs.
In accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates alone do not qualify as support for charges to Federal awards. For the year ended June 30, 2023, Unique – AIDS did not maintain support for salary based on work performed. Salary and wages were charged based on budget estimates. The salaries and wages are not charged based on actual work performed. Unique-AIDS is not in compliance with 2 CFR 200.430. No questioned costs reported. The context is a random sampling of the federal expenditures. This is not a repeat finding from the prior year. We recommend that Unique – AIDS establish a system to determine and document the time spent and amount charged to their programs.
In accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates alone do not qualify as support for charges to Federal awards. For the year ended June 30, 2023, Unique – AIDS did not maintain support for salary based on work performed. Salary and wages were charged based on budget estimates. The salaries and wages are not charged based on actual work performed. Unique-AIDS is not in compliance with 2 CFR 200.430. No questioned costs reported. The context is a random sampling of the federal expenditures. This is not a repeat finding from the prior year. We recommend that Unique – AIDS establish a system to determine and document the time spent and amount charged to their programs.
In accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates alone do not qualify as support for charges to Federal awards. For the year ended June 30, 2023, Unique – AIDS did not maintain support for salary based on work performed. Salary and wages were charged based on budget estimates. The salaries and wages are not charged based on actual work performed. Unique-AIDS is not in compliance with 2 CFR 200.430. No questioned costs reported. The context is a random sampling of the federal expenditures. This is not a repeat finding from the prior year. We recommend that Unique – AIDS establish a system to determine and document the time spent and amount charged to their programs.
In accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates alone do not qualify as support for charges to Federal awards. For the year ended June 30, 2023, Unique – AIDS did not maintain support for salary based on work performed. Salary and wages were charged based on budget estimates. The salaries and wages are not charged based on actual work performed. Unique-AIDS is not in compliance with 2 CFR 200.430. No questioned costs reported. The context is a random sampling of the federal expenditures. This is not a repeat finding from the prior year. We recommend that Unique – AIDS establish a system to determine and document the time spent and amount charged to their programs.
In accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates alone do not qualify as support for charges to Federal awards. For the year ended June 30, 2023, Unique – AIDS did not maintain support for salary based on work performed. Salary and wages were charged based on budget estimates. The salaries and wages are not charged based on actual work performed. Unique-AIDS is not in compliance with 2 CFR 200.430. No questioned costs reported. The context is a random sampling of the federal expenditures. This is not a repeat finding from the prior year. We recommend that Unique – AIDS establish a system to determine and document the time spent and amount charged to their programs.
FA 2023-001 Strengthen Controls over Expenditures Compliance Requirement: Activities Allowed or 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 Assistance Listing Number and Title: 84.010 - Title I Grants to Local Educational Agencies Federal Award Number: S010A210010-21A (Year: 2022), S010A220010 (Year 2023) Questioned Costs: $6,942 Repeat of Prior Year Finding: FA 2022-001 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Title I Grants to Local Educational Agencies program. Background: The Title I Grants to Local Educational Agencies (Title I) program was authorized under the Elementary and Secondary Education Act of 1965 to help local educational agencies (LEAs) improve teaching and learning in high-poverty schools in particular for children failing or most at-risk of failing, to meet challenging State academic standards. LEAs may operate targeted assistance programs in which children who are failing or most at-risk of failing may be served or schoolwide programs in which all children in eligible schools may be served. Title I 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. Title I funds totaling $523,820 were expended and reported on the Talbot County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. 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. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 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: Three nonpersonal services expenditures were randomly selected for testing using a non-statistical sampling approach. The expenditures were reviewed to determine if internal controls were implemented and applicable compliance requirements were met. For one sampled expenditure in the amount of $31, adequate supporting documentation in the form of an invoice was not maintained. Additionally, three personal services expenditures were randomly selected for testing using a non-statistical sampling approach. One individually significant expenditure was also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For all employees tested, supporting documentation was not maintained for additional payments totaling $6,194. • For two employees tested, specific administrative supplements were overpaid and underpaid by $717 and $500, respectively. Questioned Costs: Upon testing a sample of $1,275 in nonpersonal service expenditures, known questioned costs of $31 were identified for expenditures that were not supported by adequate documentation. Using the total nonpersonal services expenditures population of $74,447, we project the likely questioned costs to be approximately $1,810. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Additionally, upon testing a sample of $38,405 in personal services expenditures, known questioned costs of $6,611 were identified for expenditures not supported by adequate documentation. Using the total personal services expenditures population of $143,515 (excluding benefits payments), we project the likely questioned costs to be approximately $24,705. Furthermore, known questioned costs identified for undocumented personal services payments associated with individually significant items tested totaled $300. Therefore, the known and likely questioned costs identified for all unallowable and/or undocumented payments throughout the sample and individually significant items tested totaled $6,942 and $26,815, respectively. Cause: Per discussion with management, the School District believes that this is due to change in management in the financial department. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the Title I program. Failure to ensure that documentation exists to support the allowability of payments from the Title I fund may expose the School District to unnecessary financial strains and shortages as 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 Title I program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District's purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2023-001 Strengthen Controls over Expenditures Compliance Requirement: Activities Allowed or 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 Assistance Listing Number and Title: 84.010 - Title I Grants to Local Educational Agencies Federal Award Number: S010A210010-21A (Year: 2022), S010A220010 (Year 2023) Questioned Costs: $6,942 Repeat of Prior Year Finding: FA 2022-001 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Title I Grants to Local Educational Agencies program. Background: The Title I Grants to Local Educational Agencies (Title I) program was authorized under the Elementary and Secondary Education Act of 1965 to help local educational agencies (LEAs) improve teaching and learning in high-poverty schools in particular for children failing or most at-risk of failing, to meet challenging State academic standards. LEAs may operate targeted assistance programs in which children who are failing or most at-risk of failing may be served or schoolwide programs in which all children in eligible schools may be served. Title I 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. Title I funds totaling $523,820 were expended and reported on the Talbot County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. 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. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 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: Three nonpersonal services expenditures were randomly selected for testing using a non-statistical sampling approach. The expenditures were reviewed to determine if internal controls were implemented and applicable compliance requirements were met. For one sampled expenditure in the amount of $31, adequate supporting documentation in the form of an invoice was not maintained. Additionally, three personal services expenditures were randomly selected for testing using a non-statistical sampling approach. One individually significant expenditure was also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For all employees tested, supporting documentation was not maintained for additional payments totaling $6,194. • For two employees tested, specific administrative supplements were overpaid and underpaid by $717 and $500, respectively. Questioned Costs: Upon testing a sample of $1,275 in nonpersonal service expenditures, known questioned costs of $31 were identified for expenditures that were not supported by adequate documentation. Using the total nonpersonal services expenditures population of $74,447, we project the likely questioned costs to be approximately $1,810. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Additionally, upon testing a sample of $38,405 in personal services expenditures, known questioned costs of $6,611 were identified for expenditures not supported by adequate documentation. Using the total personal services expenditures population of $143,515 (excluding benefits payments), we project the likely questioned costs to be approximately $24,705. Furthermore, known questioned costs identified for undocumented personal services payments associated with individually significant items tested totaled $300. Therefore, the known and likely questioned costs identified for all unallowable and/or undocumented payments throughout the sample and individually significant items tested totaled $6,942 and $26,815, respectively. Cause: Per discussion with management, the School District believes that this is due to change in management in the financial department. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the Title I program. Failure to ensure that documentation exists to support the allowability of payments from the Title I fund may expose the School District to unnecessary financial strains and shortages as 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 Title I program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District's purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2023-002 Improve Controls over Expenditures Compliance Requirement: Activities Allowed or 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 Assistance Listing 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 – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $98,807 Repeat of Prior Year Finding: FA 2022-002 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that expenditures were appropriately documented to support allowability. 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 the 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 $1,201,097 were expended and reported on the Talbot County School District’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 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. 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: A sample of 12 nonpersonal services expenditures was randomly selected for testing using a non-statistical sampling approach. In addition, two individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • A purchase order was not maintained for two of the expenditures. • The check amount, invoice, and purchase requisition form for one expenditure did not agree. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS In addition, a sample of 23 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • Timesheets or other supporting documentation could not be provided for payments made to 15 employees. • Timesheets provided for 15 employees did not agree to amounts paid for the corresponding time period. • One employee received a salary increase that was not supported by a board-approved salary scale. Questioned Costs: Upon testing a sample of $34,392 in nonpersonal services expenditures, known questioned costs of $1,365 were identified. Using the total non-personal services expenditures population of $144,208, we project the likely questioned costs to be approximately $5,723. Additionally, upon testing a sample of $274,649 in personal services expenditures, known questioned costs of $97,442 were identified. Using the total personal services expenditures population of $864,482, we project the likely questioned costs to be approximately $306,706. Therefore, the known and likely questioned costs identified for unallowable payments totaled $98,807 and $312,429. The following Assistance Listing Numbers were affected by known and questioned costs: 84.425D and 84.425U. Cause: Per discussion with management, the School District believes that this is due to change in management in the financial department. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that documentation exists to support the allowability of payments from the ESSER fund may expose the School District to unnecessary financial strains and shortages as 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 all expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2023-002 Improve Controls over Expenditures Compliance Requirement: Activities Allowed or 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 Assistance Listing 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 – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $98,807 Repeat of Prior Year Finding: FA 2022-002 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that expenditures were appropriately documented to support allowability. 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 the 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 $1,201,097 were expended and reported on the Talbot County School District’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 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. 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: A sample of 12 nonpersonal services expenditures was randomly selected for testing using a non-statistical sampling approach. In addition, two individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • A purchase order was not maintained for two of the expenditures. • The check amount, invoice, and purchase requisition form for one expenditure did not agree. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS In addition, a sample of 23 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • Timesheets or other supporting documentation could not be provided for payments made to 15 employees. • Timesheets provided for 15 employees did not agree to amounts paid for the corresponding time period. • One employee received a salary increase that was not supported by a board-approved salary scale. Questioned Costs: Upon testing a sample of $34,392 in nonpersonal services expenditures, known questioned costs of $1,365 were identified. Using the total non-personal services expenditures population of $144,208, we project the likely questioned costs to be approximately $5,723. Additionally, upon testing a sample of $274,649 in personal services expenditures, known questioned costs of $97,442 were identified. Using the total personal services expenditures population of $864,482, we project the likely questioned costs to be approximately $306,706. Therefore, the known and likely questioned costs identified for unallowable payments totaled $98,807 and $312,429. The following Assistance Listing Numbers were affected by known and questioned costs: 84.425D and 84.425U. Cause: Per discussion with management, the School District believes that this is due to change in management in the financial department. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that documentation exists to support the allowability of payments from the ESSER fund may expose the School District to unnecessary financial strains and shortages as 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 all expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2023-002 Improve Controls over Expenditures Compliance Requirement: Activities Allowed or 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 Assistance Listing 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 – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: $98,807 Repeat of Prior Year Finding: FA 2022-002 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that expenditures were appropriately documented to support allowability. 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 the 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 $1,201,097 were expended and reported on the Talbot County School District’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 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. 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: A sample of 12 nonpersonal services expenditures was randomly selected for testing using a non-statistical sampling approach. In addition, two individually significant items were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • A purchase order was not maintained for two of the expenditures. • The check amount, invoice, and purchase requisition form for one expenditure did not agree. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS In addition, a sample of 23 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • Timesheets or other supporting documentation could not be provided for payments made to 15 employees. • Timesheets provided for 15 employees did not agree to amounts paid for the corresponding time period. • One employee received a salary increase that was not supported by a board-approved salary scale. Questioned Costs: Upon testing a sample of $34,392 in nonpersonal services expenditures, known questioned costs of $1,365 were identified. Using the total non-personal services expenditures population of $144,208, we project the likely questioned costs to be approximately $5,723. Additionally, upon testing a sample of $274,649 in personal services expenditures, known questioned costs of $97,442 were identified. Using the total personal services expenditures population of $864,482, we project the likely questioned costs to be approximately $306,706. Therefore, the known and likely questioned costs identified for unallowable payments totaled $98,807 and $312,429. The following Assistance Listing Numbers were affected by known and questioned costs: 84.425D and 84.425U. Cause: Per discussion with management, the School District believes that this is due to change in management in the financial department. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that documentation exists to support the allowability of payments from the ESSER fund may expose the School District to unnecessary financial strains and shortages as 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 all expenditures are supported by appropriate documentation. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: We concur with this finding.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.
Finding Number: 2023-003 Program: Research and Development Cluster – Geographic Programs-Great Lakes Restoration Initiative Federal Agency Name: Environmental Protection Agency Federal Award Year: July 1, 2022 – June 30, 2023 Federal Assistance Listing Numbers: 66.469 Finding Type: Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria The Uniform Guidance Section 200.430, states that 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 (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity and (vi) 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. Further, in accordance with 2 CFR 200.303(a), non-federal entities 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. Condition The University performs certain manual calculations when a faculty or graduate assistant has multiple appointments in order to determine the appropriate percentage allocation to each federal award or non-federal activity. During our testing internal controls and compliance over allowable costs/cost principles specific to payroll we noted that the University did not have internal controls designed at a sufficient level of precision to detect errors in manual calculations when the employee has more than one supplemental pay authorization. As a result we noted that, 2 out of 62 payroll transactions tested the amount allocated and charged to the grant was incorrect. We noted that the 2 transactions were for the same employee and impacted the same award. Cause In discussing this with the University, this employee had submitted two separate payroll authorizations for his summer research salary at different times and a manual calculation error was made in the allocation to the appropriate grant. The University’s internal controls over review of supplemental pay authorizations did not include a secondary review of the calculation by someone other than the preparer before the allocation was input into the payroll system. Effect The lack of internal controls at a sufficient level of precision and in particular where there are manual calculations can result in incorrect allocations and charges to federal awards and ultimately unallowable costs. Questioned Costs None. Statistical Sampling Our sample was not and was not intended to be statistically valid. Identification of Whether the Audit Finding was a Repeat Finding This finding is a repeat finding in the immediately prior audit finding 2022-003 Recommendation We recommend that the University implement a more thorough and detailed process and related internal controls to review payroll authorization forms and manual calculations performed before the payroll allocation is recorded to the federal grant, including a review by someone other than the preparer.
Criteria: 2 CFR 200.430(h)(8)(i) requires that amounts of personnel expenses are properly documented and include appropriate controls and documentation to support the distribution of the employee's wages among specific activities if the employee works on more than one award. Condition: Of the testing population of 60 payroll transactions tested, for 10 transactions the Organization was unable to provide a timesheet or other documentation to substantiate the application of the individual's time for that period. In addition for 17 transactions, the allocation on the time sheet provided does not agree to the allocation of the individual's wages to the program in the general ledger and voucher. Cause: Due to limited staffing resources, the Organization was not able to ensure maintenance of adequate documentation. Effect: The Organization is not able to demonstrate that the personnel expenses allocated to the grant was proper and ensure avoidance of duplication of funding requests for the same amounts. Questioned Costs: Unknown Recommendation: Management should review and refine its process of tracking payroll costs by grant to ensure that the costs are supported by a system of internal controls which provides reasonable assurance that the charges are accurate, are properly allocated, and reasonably reflect the total activity for which the employee is compensated. Views of Responsible Officials: Management agrees with the finding; see corrective action plan.
2023-003 Allowable Costs/Cost Principles Federal Program Information Funding Agency: U.S. Department of Education Title: Title I Grants to Local Educational Agencies AL Number: 84.010 Criteria In accordance with 2 CFR Section 200.430(g)(1)(vi), the District must document employee time and effort spent in the Title I program, if under 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Furthermore, a system of internal controls would have an entity file all approved wages in the employee personal file. Condition The District was missing documentation to support time and effort of faculty members who had wages less than 100% being charged to the Title I program. Also, we noted during testing that 1 employee of the 11 hourly employees tested had the timecard not calculated correctly and 7 time documents out of 48 tested did not have the proper approval. Questioned Costs None Context The District had recorded partial or entire salaries of 132 employees to the program. Of this listing of employees, we tested 11. Effect Expenditures improperly or inaccurately being charged to the program. Cause Management oversight. Recommendation We recommend the District require all faculty in the Title I program complete time and effort reports. We also recommend that the District calculates timecards to be reviewed before payroll is processed. We also recommend the District implement a policy that all timecards submitted are reviewed and approved by employee’s supervisor. Repeat Finding This is a repeat finding of 2022-005. Views of Responsible Officials See corrective action plan.
Criteria: In accordance with 2 CFR 200 Subpart E, the University is required to conform to allowability of cost provisions, and 2 CFR 200.303 requires the organization to establish and maintain effective controls over federal awards. Allowable costs charged to federal programs, whether direct or indirect, must be allowable and be determined in accordance with Subpart E – Cost Principles of the Uniform Guidance. Effective internal controls should include procedures to ensure federal expenditures and amounts are for activities allowed or unallowed and allowable costs/cost principles, as well as accurately and completely reported on the SEFA. According to 2 CFR 200.430, 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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient; (iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; (v) Comply with the established accounting policies and procedures of the recipient or subrecipient and (vi) 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition and Context: The University receives Supplemental Nutrition Assistance Program (SNAP) Cluster program funding at its Sacramento campus to perform nutrition outreach and education services to residents of the State of California. The Sacramento campus administers the SNAP Cluster nutrition education programs through its College of Continuing Education (CCE) and Population Research Center (PRC) offices. SNAP Cluster program expenditures are primarily comprised of payroll for program personnel performing various program activities and related fringe benefits and indirect costs. During our testing of 18 payroll expenditures for CCE employees (totaling $90,946) and 40 payroll expenditures for PRC employees (totaling $66,458), we noted effort reports detailing 100% of the employee's activities were not prepared for certain employees. Upon further investigation and discussion with CCE and PRC program management, we noted effort reports were not prepared for any employees whose payroll expenditures were charged to the SNAP Cluster program, except for student workers who solely worked on SNAP Cluster program activities. The payroll expenditures and related costs impacted by the inadequate effort reports, are described in the table below: Expenditure category Questioned costs Excerpt of total SNAP Cluster program expenditures by impacted expenditure category Payroll $1,151,941 $1,354,046 Fringe benefits $641,501 $641,501 Indirect costs $448,286 $660,709 Total $2,241,728 $2,656,257 Total SNAP Cluster program expenditures were $3,688,927 for the year ended June 30, 2023. We noted additional instances of noncompliance as follows: • In our testing of 58 payroll expenditures, the hourly payroll rates used to prepare the quarterly payroll remittances submitted to the State of California exceeded the actual payroll rates paid for 15 employees resulting in an overcharge of payroll, fringe benefits, and indirect costs to the SNAP program of $11,710, $9,684, and $5,348, respectively. As these 15 employees did not have effort reports as discussed above, payroll, fringe benefits, and indirect costs associated with these 15 employees has already been included in the table above. • One individually significant payroll expenditure that was associated with one employee was double counted in the quarterly State of California remittance billing resulting in an overcharge to the SNAP Cluster program of $27,004, $10,801, and $9,451, respectively. As the employee did not have an effort report as discussed above, payroll, fringe benefits, and indirect costs associated with this employee has already been included in the table above. • In our testing of 7 indirect cost charges, we identified 4 indirect cost charges that utilized higher than the allowed hourly rates within the calculation. These 4 indirect cost charges related to CCE employees in which the hourly rate listed in the program agreement was billed versus the employee’s actual hourly pay rate and fringe benefit costs. As a result, the total payroll charges used to bill the indirect cost rate of 25% utilized unallowable payroll expenditures, which resulted in the SNAP Cluster program being overcharged by $46,922. As these employees also did not have effort reports as discussed above, payroll, fringe benefits, and indirect costs associated with these CCE employees has already been included in the table above. In addition, we noted the Sacramento campus has not established adequate internal controls to ensure: (1) payroll expenditures charged to the SNAP Cluster program are properly determined and supported in accordance with the requirements of the Uniform Guidance and (2) fringe benefit and indirect costs are properly calculated by applying the approved fringe or indirect cost rate to a base that includes only allowable costs. Cause & Effect: The errors noted above were primarily due to insufficient controls over the establishment and tracking of SNAP Cluster program activities as federal funding within Sacramento’s general ledger. As a result, a portion of SNAP program expenditures and activities were not processed in accordance with applicable federal guidelines. Additional errors noted above relate to insufficient controls over the accuracy of the payroll, fringe benefits, and indirect cost charged to the SNAP Cluster program. The inadequate review procedures over payroll, fringe benefits, and indirect cost expenditures resulted in unallowable charges to the SNAP Cluster program in the amount of $2,241,728.
FINDING 2023-004 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context A cash reimbursement is provided to the School Corporation based on meals served under the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. The cash reimbursement is to be used for the benefit of the food service program. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified above. 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. (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 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 . . . (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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. 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. 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context A cash reimbursement is provided to the School Corporation based on meals served under the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. The cash reimbursement is to be used for the benefit of the food service program. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified above. 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. (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 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 . . . (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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. 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. 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context A cash reimbursement is provided to the School Corporation based on meals served under the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. The cash reimbursement is to be used for the benefit of the food service program. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified above. 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. (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 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 . . . (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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. 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. 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context A cash reimbursement is provided to the School Corporation based on meals served under the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. The cash reimbursement is to be used for the benefit of the food service program. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified above. 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. (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 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 . . . (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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. 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. 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context A cash reimbursement is provided to the School Corporation based on meals served under the School Breakfast Program, National School Lunch Program, and Summer Food Service Program for Children. The cash reimbursement is to be used for the benefit of the food service program. An effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance should be designed and implemented to ensure expenditures charged to the food service program fund (fund 800) are for the benefit of the food service program. The School Corporation's process for payroll disbursements included a segregation of duties; however, no individual reviewer or approver was provided detailed payroll information that would have allowed them to determine the expense was being paid from the food service program. Due to the lack of internal controls, the School Corporation paid $23,682 of administrative salaries based on fixed percentages without supporting documentation to indicate how the percentages were determined or time records indicating time spent on the program by the applicable administrators. The amount paid, $23,682, is considered questioned costs. INDIANA STATE BOARD OF ACCOUNTS 19 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the salaries identified above. 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. (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 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 . . . (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; or two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. 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. 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, administrative payroll was charged to the school lunch fund without appropriate supporting documentation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $23,682 were identified as noted in the Condition and Context. Recommendation We recommended the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-010 Subject: COVID-19 - Education Stabilization Fund - 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): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to states and school districts to help safely reopen and sustain the safe operation of schools and to address the impact of the coronavirus pandemic on the nation's students. States were required to subgrant a portion of their ESSER allocations to Local Educational Agencies (LEA). Prior to the LEAs receiving their respective subgrants, the LEAs were required to complete an application for the ESSER funding, which was submitted to the Indiana Department of Education (IDOE), the pass-through entity for approval. The application included a district level budget identifying how the LEA intended to spend program funds. A sample of 25 claims charged to the ESSER grant program for which reimbursement was received during the audit period was selected for testing to verify that the expenditures were in conformance with the applicable cost principles. Of the 25 claims tested, the following errors were noted: INDIANA STATE BOARD OF ACCOUNTS 32 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims, totaling $983, were for payments to a teacher for part-time tutoring. However, there was not a School Board approved contract or Salary Ordinance that showed the approval of this position or the rate to be paid. Two claims, totaling $318,922, were for payments for playground equipment; however, the related contract supporting the purchase was not provided. The lack of effective 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. (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); . . . INDIANA STATE BOARD OF ACCOUNTS 33 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 the School Corporation's management. 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. 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, expenses were paid without adequate supporting documentation. Noncompliance with the grant agreement and the 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 proper system of internal controls and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-010 Subject: COVID-19 - Education Stabilization Fund - 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): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to states and school districts to help safely reopen and sustain the safe operation of schools and to address the impact of the coronavirus pandemic on the nation's students. States were required to subgrant a portion of their ESSER allocations to Local Educational Agencies (LEA). Prior to the LEAs receiving their respective subgrants, the LEAs were required to complete an application for the ESSER funding, which was submitted to the Indiana Department of Education (IDOE), the pass-through entity for approval. The application included a district level budget identifying how the LEA intended to spend program funds. A sample of 25 claims charged to the ESSER grant program for which reimbursement was received during the audit period was selected for testing to verify that the expenditures were in conformance with the applicable cost principles. Of the 25 claims tested, the following errors were noted: INDIANA STATE BOARD OF ACCOUNTS 32 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims, totaling $983, were for payments to a teacher for part-time tutoring. However, there was not a School Board approved contract or Salary Ordinance that showed the approval of this position or the rate to be paid. Two claims, totaling $318,922, were for payments for playground equipment; however, the related contract supporting the purchase was not provided. The lack of effective 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. (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); . . . INDIANA STATE BOARD OF ACCOUNTS 33 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 the School Corporation's management. 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. 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, expenses were paid without adequate supporting documentation. Noncompliance with the grant agreement and the 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 proper system of internal controls and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-010 Subject: COVID-19 - Education Stabilization Fund - 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): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to states and school districts to help safely reopen and sustain the safe operation of schools and to address the impact of the coronavirus pandemic on the nation's students. States were required to subgrant a portion of their ESSER allocations to Local Educational Agencies (LEA). Prior to the LEAs receiving their respective subgrants, the LEAs were required to complete an application for the ESSER funding, which was submitted to the Indiana Department of Education (IDOE), the pass-through entity for approval. The application included a district level budget identifying how the LEA intended to spend program funds. A sample of 25 claims charged to the ESSER grant program for which reimbursement was received during the audit period was selected for testing to verify that the expenditures were in conformance with the applicable cost principles. Of the 25 claims tested, the following errors were noted: INDIANA STATE BOARD OF ACCOUNTS 32 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims, totaling $983, were for payments to a teacher for part-time tutoring. However, there was not a School Board approved contract or Salary Ordinance that showed the approval of this position or the rate to be paid. Two claims, totaling $318,922, were for payments for playground equipment; however, the related contract supporting the purchase was not provided. The lack of effective 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. (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); . . . INDIANA STATE BOARD OF ACCOUNTS 33 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 the School Corporation's management. 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. 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, expenses were paid without adequate supporting documentation. Noncompliance with the grant agreement and the 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 proper system of internal controls and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-010 Subject: COVID-19 - Education Stabilization Fund - 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): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Elementary and Secondary School Emergency Relief (ESSER) Fund provided funding to states and school districts to help safely reopen and sustain the safe operation of schools and to address the impact of the coronavirus pandemic on the nation's students. States were required to subgrant a portion of their ESSER allocations to Local Educational Agencies (LEA). Prior to the LEAs receiving their respective subgrants, the LEAs were required to complete an application for the ESSER funding, which was submitted to the Indiana Department of Education (IDOE), the pass-through entity for approval. The application included a district level budget identifying how the LEA intended to spend program funds. A sample of 25 claims charged to the ESSER grant program for which reimbursement was received during the audit period was selected for testing to verify that the expenditures were in conformance with the applicable cost principles. Of the 25 claims tested, the following errors were noted: INDIANA STATE BOARD OF ACCOUNTS 32 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two claims, totaling $983, were for payments to a teacher for part-time tutoring. However, there was not a School Board approved contract or Salary Ordinance that showed the approval of this position or the rate to be paid. Two claims, totaling $318,922, were for payments for playground equipment; however, the related contract supporting the purchase was not provided. The lack of effective 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. (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); . . . INDIANA STATE BOARD OF ACCOUNTS 33 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 the School Corporation's management. 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. 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, expenses were paid without adequate supporting documentation. Noncompliance with the grant agreement and the 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 proper system of internal controls and develop policies and procedures to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.