Finding Text
Federal Agency: U.S. Department of Education
Federal Program Name: Elementary and Secondary School Relief Fund
Assistance Listing Number: 84.425U, 84.425W
Federal Award Identification Number and Year: S425U210044 Federal Award Date 12/6/2021 and 3/13/2020
Pass-Through Agency: Wisconsin Department of Public Instruction
Pass-Through Number(s): 2022-105726-DPI-ESSERFIII-165, 2024-105726-DPI-LETRS-165, Unknown
Award Period: July 1, 2023 – June 30, 2024
Type of Finding: Material Weakness in Internal Control over Compliance
Criteria or Specific Requirement: Segregation of duties over reporting and allowable cost is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction.
Condition: There is no formal, documented review and approval by any District employee to ensure the activity and cost is allowable under the grant. There is no formal, documented review of the payroll transactions processed by the District Office Manager and subsequently included on the grant claims. There is no review of time and effort documentation prepared by employees and no control in place to update payroll expenses claimed based on the actual time and effort documentation prior to submitting the final claim. The District is required to file an annual report for ESSER. There was no review of the data entered into the form by someone other than the preparer. Accordingly, this does not allow for a proper segregation of duties for internal control purposes.
Questioned Costs: None.
Context: When identifying internal controls over compliance related to reporting (annual report) and allowable costs and allowable activities, it was noted that the Bookkeeper or District Office Manager position handled all the responsibilities of those functions related to ESSER and there were no formal, documented internal controls over compliance in place to review that costs met all requirements and were properly documented. There was no review of the work completed by someone other than the preparer.
Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District’s operations.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. District could incorrectly report amounts and other data on the annual report.
Repeat Finding: No.
Recommendation: We recommend the District review its grant disbursement process to ensure that there is adequate segregation of duties in regards to initiating, authorizing, reviewing for grant allowability and approving purchases, along with adding controls to ensure that the item purchased was received by the District. We also recommend the District review its payroll process and identify payroll tasks that could be reassigned to other district personnel or consider implementing additional review procedures specifically focused on payroll and related fringe benefit costs claimed on federal and state grants. We also recommend the District review its grant reporting processes and implement internal controls to help ensure that there is adequate segregation of duties in regards to grant reporting including special reports.
Views of Responsible Officials: There is no disagreement with the audit finding. District staff will accumulate as much of the information required for federal and state awards as we can and reconcile the revenue and expenditures information to the general ledger for these awards.