Finding Text
SCHEDULE OF FEDERAL AWARD FINDINGS AND
QUESTIONED COSTS
Kalama School District No. 402
September 1, 2023 through August 31, 2024
2024-001 The District’s internal controls were inadequate for ensuring compliance with requirements for time-and-effort documentation.
Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund
Federal Grantor Name: U.S. Department of Education
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of Superintendent of Public Instruction
Pass-through Award/Contract Number: COVID-19, 84.425V-0144008
COVID-19, 84.425U-0138293
COVID-19, 84.425U-0137283
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
During fiscal year 2024, the District spent $590,344 in federal funds from the Education Stabilization Fund (ESF). The objectives of the ESF program are to prevent, prepare for and respond to the COVID-19 pandemic.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
The District is responsible for ensuring it supports all payroll costs charged to the program with adequate time-and-effort documentation, as federal regulations and the awarding agency require. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report, such as a detailed timesheet.
Time-and-effort documentation must also be signed and dated after employees complete their work.
Description of Condition
The District’s internal controls were ineffective for ensuring it supported all salaries and benefits it charged to the Transition to Kindergarten program, which was funded using the ESF, as federal regulations and the Office of Superintendent of Public Instruction (OSPI) require.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
District officials did not know about the requirement to obtain time-and-effort documentation for staff it paid with Transition to Kindergarten program funds.
Effect of Condition
The District did not obtain time-and-effort documentation for four employees whose salary and benefits totaling $266,236 were charged to the federal program.
Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the granting agency’s documentation requirements to support costs charged to the federal program. Further, the District cannot assure federal grantors that payroll costs charged to the program were accurate and valid.
During the audit, the District supported these payroll costs by providing alternative documentation to show the employees worked on the federal program; therefore, we are not questioning these costs.
Recommendation
We recommend the District develop and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining time-and-effort documentation timely.
District’s Response
The Kalama School District greatly appreciates the work and efforts of the State Auditor's Office (SAO). Furthermore, we appreciate that we were able to provide, and the SAO accepted, alternative documentation showing that our team members were correctly charged off to the Federal Grant appropriately. We had a new Business Director start with the district at the end of the 23-24 FY and they immediately found that Time and Effort documentation was missing or done incorrectly in the past. We were able to get this documentation for the current fiscal year and will continue to collect Time and Effort documentation each year.
Auditor’s Remarks
We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit.
Applicable Laws and Regulations
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 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs.
Office of Superintendent of Public Instruction (OSPI) Addendum to Bulletin 048-17, Guidelines for Charging Employee Compensation to Federal Grants Office of Superintendent of Public Instruction Addendum to Bulletin 048-17, Guidelines for Charging Employee Compensation to Federal Grants establishes requirements for documenting time-and-effort, including fixed schedule systems.