Finding Text
Finding 2023-001 – Education Stabilization Fund – AL No.’s 84.425D & 84.425U
Department of Education
Massachusetts Department of Elementary and Secondary Education
Noncompliance and Significant Deficiency Related to Internal Control over Compliance of the Major Program
Criteria: Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management of the District is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis.
Condition and Context: Control deficiencies related to disbursements were noted as a result of the testing of internal controls over payroll. Specifically, a sample of payroll disbursements charged to the major program were tested in order to determine if adequate internal controls were in place. As a result of the testing of payroll disbursements charged to the programs, the employees tested were found to not have adequately approved and or documented employee payroll rate agreements.
Cause: BMR experienced limited oversight of detailed financial activities due to the ongoing search for an experienced Director of Finance and Operations. While general budgetary oversight was maintained to ensure the district's overall fiscal health, detailed financial oversight was insufficient during this period.
Effect or Potential Effect: Due to the significant deficiencies and noncompliance in internal controls noted above, there is a risk of inappropriate rate of pay and/or wages being paid.
Identification as a Repeat Finding: N/A
Questioned Costs: Questioned costs could not be determined.
Recommendation: The Blackstone – Millville Regional School District should improve the internal controls over Activities Allowed/Allowable Costs by ensuring employee’s payroll rate agreements are approved by an appropriate level of management and in a timely manner.
Managements Response: Due to the timing of the grant, we implemented several internal controls beginning at the start of fiscal year 2025 to address the identified findings. Payroll accounts are now reviewed on an ongoing basis to ensure proper coding and accuracy. Additionally, the Grants Manager conducts consistent reviews of expenditures charged to grants to confirm that all costs are allowable under the respective grant guidelines. This review process ensures that any reimbursement requests for expenditures align properly with grant requirements.
As part of these reviews, we also verify and confirm the rates used to ensure they comply with the terms of the approved grant funding. These measures, initiated at the beginning of fiscal year 2025, collectively strengthen our internal controls, enhance compliance, and improve the overall accuracy of our financial practices.