Finding Text
2021-010 Inability to Test Compliance (Material Weakness)
Federal Agency: Department of Education
Pass-through Agency: New Hampshire Department of Education
Cluster/Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425D
Passed-through Identification: 20204986 & 20211886
Compliance Requirements: All
Type of Finding:
Internal Control over Compliance – Material Weakness
Material Noncompliance
Criteria or Specific Requirement: In accordance with 2 CFR 200.334, recipients of federal funds must retain financial and programmatic records, supporting documents, statistical records, and all other records pertinent to a federal award for a period of three years from the date of submission of the final expenditure report. Additionally, per 2 CFR 200.303, recipients must establish and maintain effective internal control over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award.
Condition: The School District informed the engagement team that it was unable to locate all required documentation necessary to support expenditures and compliance with federal program requirements. This affected our ability to complete the required testing over the major program.
Cause: The School District does not have a consistent or centralized process for retaining and organizing documentation related to federal program expenditures and compliance requirements. Staff turnover and lack of clear documentation procedures contributed to the unavailability of records.
Effect: Due to the absence of required supporting documentation, we were unable to obtain sufficient appropriate audit evidence to support compliance with the federal requirements for the affected programs. As a result, we were unable to determine whether certain transactions were allowable and in compliance with the applicable grant requirements. This represents a material noncompliance with federal regulations and may result in questioned costs or other remedial actions by the granting agency.
Questioned Costs: $505,347. This amount represents the total presented on the Schedule of Expenditures of Federal Awards. The entire amount is in question because no testing could be performed as required documentation was not retained by the School District.
Identification as Repeat Finding: This is not a repeat finding.
Recommendation: We recommend that the School District implement stronger internal controls over document retention, including centralized digital storage systems, regular staff training on federal documentation requirements, and written procedures outlining retention responsibilities. These procedures should ensure that all required documentation is maintained and readily accessible for audit and monitoring purposes.
Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.