Finding 1117519 (2024-003)

Material Weaknesses: 2024-003 Federal Agency: U.S. Department of Education Pass Thru Entity: Oklahoma State Department of Education Program: COVID-19 ARP ESSER III Assistance Listing: 84.425U Grant Period: Year Ending June 30, 2024 Condition: Federal expenditures were not properly accounted for in the Oklahoma Cost Accounting System in the federal project. Due to errors, the District’s accounting records submitted to the Oklahoma Cost Accounting System for expenses in the federal project were overstated. Encumbrances were left open in accounts payable that were unused. Criteria: Public schools must follow the Oklahoma Cost Accounting System which ensures legal compliance by recording and summarizing financial transactions. Part of the coding ensures that federal expenditures are coded as such and reported to the Oklahoma State Department of Education which allows for tracking of federal expenditures. Cause: The District’s internal control procedure of reviewing the accounting records for completeness and accuracy by accounting personnel and management that were to provide effective oversight of the District’s financial reporting failed to detect proper reporting of federal expenditures in the accounting records. Effect: The issue resulted in incorrect reporting of expenditures submitted to the Oklahoma State Department of Education. Due to the error, the Districts expenses for the federal project were overstated. Encumbrances were set up in the amount of $153,030.96, but the District only claimed $100,808.10 on the final claim leaving $52,222.86 overstated. Therefore, the expenditures reported on the Schedule of Expenditures of Federal Awards will not match the numbers submitted to the Oklahoma State Department of Education. Recommendation: The District’s accounting personnel and management must continually monitor and review all expenses to verify coding. Controls should be put in place to compare federal program records with what is reported in the Oklahoma Cost Accounting System. Encumbrances should be reviewed at year end and closed if not accurate. Encumbrances should only be set up in a federal project code if they are completed and paid by September 30th and claimed in the federal program. Internal controls should be in place to provide effective oversight of the District’s financial reporting by accounting personnel and those charged with governance. District’s Response: The District will review all federal program coding and year end encumbrances. Questioned Costs: $ 0