Finding Text
Finding 2024-004: Material Weakness - Internal Control over Activities Allowed/Allowable Costs
Program: COVID-19: Education Stabilization Fund
Assistance Listing Number: 84.425
Pass-Through Agency: Wisconsin Department of Public Instruction
Repeat of Prior Year Finding 2023-004
Criteria: A system of internal control should be in place and operating effectively to achieve a higher reliability that errors or irregularities in expenditure recording would be identified by the District. This system should include approval of all inputs.
Condition: Approval is not consistently documented on invoices and extended pay wages lacked documented approval. Of the 40 expenditures tested for internal control purposes, 29 lacked adequate documentation of review and approval. The sample was not statistically valid.
Cause: The District did not ensure that the proper reviews and approvals were in place prior to payment.
Context: Of the 40 expenses tested, 10 payroll transactions involving extended pay were found to not have approval over the amounts paid by the District, and 19 invoices were found to not have documented approval. One person handles the majority of the supporting documents, with no outside review. Extended pay rates were approved many years ago, but no documentation of the approved amounts exists. Purchase orders are generally approved with account coding, but this was not done for purchases that fell outside the usual PO process.
Effect: Because of the lack of internal controls, it is less likely that errors or irregularities in the expenditures would be discovered internally. Unallowable costs could be paid for with grant funds.
Questioned Costs: None noted.
Recommendation: An appropriate, knowledgeable employee should review all invoices and timecards prior to payment, including extended time for training session compensation and approval should be documented. We also recommend that employer extended pay rates should be approved annually by the School Board, and documentation of approved rates should be retained.
Views of Responsible Officials: The District acknowledges this finding. Invoices are reviewed by the Administration and Board of Education monthly. Additional reviews by administration will be put into place. The Board of Education shall approve the pay rates annually and appropriate documentation kept.