Finding 1054631 (2022-003)

Material Weakness
Requirement
AB
Questioned Costs
-
Year
2022
Accepted
2024-07-11
Audit: 314870
Organization: Crow Creek Tribal Schools (SD)
Auditor: Elo Prof LLC

AI Summary

  • Core Issue: The School lacks effective internal controls over compliance with federal funding requirements, leading to inconsistent application of policies for Hazard Pay.
  • Impacted Requirements: Federal awards must be spent on allowable costs with proper documentation, as outlined in the Uniform Guidance.
  • Recommended Follow-Up: Management should establish and enforce procedures to ensure compliance with federal regulations and improve control processes.

Finding Text

Finding: 2022‐003 84.425 – Education Stabilization Fund Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Criteria: The School is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Various instances were identified through testing of direct expenditures and payroll transactions where controls in place were not consistently applied or were not documented, designed, or implemented properly to ensure compliance with requirements of each major program. A proper review of requests, expenditures, and timesheets includes a review that assures that the summarized information is supported by the underlying documentation, such as appropriate account coding, funding source, and/or pay rates. 1. The School utilized COVID‐19 funding to incentivize retention of staff for the Fall and Spring Semesters. Additionally, the School paid 25% of the employees’ wages for actual hours worked as Hazard Pay, to encourage participation and fulfill student needs during the Pandemic. In 49 out of 358 transactions tested that were funded using COVID‐19 funds, Hazard Pay was incorrectly or inconsistently computed due to inconsistent application of policy, resulting in a net underpayment of wages of $504. Cause: Various instances were identified through testing of payroll transactions where controls in place were not consistently applied (primarily manual controls) or were not documented, designed, or implemented properly to ensure compliance with requirements of each major program. Effect: Without a properly designed system of internal controls, including review and approval of all disbursements and payroll, the School may not be able to remain compliant with laws and regulations or other compliance requirements. Questioned Costs: None reported. Context: A non‐statistical sample of 358 payroll transactions were selected. There were 49 instances identified where the Hazard Pay was inconsistently computed for non‐regular pay codes 21 of those were overpaid Hazard pay totaling $1,448, and 28 instances totaling $1,952 were underpaid out of a total sample of $162,733. Repeat Finding from Prior Year: No. Recommendation: We recommend that management implement procedures and control processes to comply with the federal requirements noted above. Views of Responsible Officials: Management is in agreement.

Categories

Allowable Costs / Cost Principles Material Weakness

Other Findings in this Audit

  • 478188 2022-002
    Material Weakness
  • 478189 2022-003
    Material Weakness
  • 1054630 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
15.042 Indian School Equalization Program $4.90M
84.425 Education Stabilization Fund $3.07M
15.046 Administrative Cost Grants for Indian Schools $1.95M
84.010 Title I Grants to Local Educational Agencies $1.41M
84.027 Special Education_grants to States $1.09M
15.047 Indian Education Facilities, Operations, and Maintenance $1.00M
10.555 National School Lunch Program $396,049
15.044 Indian Schools_student Transportation $363,789
84.287 Twenty-First Century Community Learning Centers $79,953
84.048 Career and Technical Education -- Basic Grants to States $8,629