Finding Text
Finding - Contrary to Federal regulations, District records did not always accurately reflect employee work performed for, and support the distribution of employee salaries and benefits charged to, the SEC. Criteria - Title 2, Section 200.430(i), CFR, requires that charges for Federal awards for salaries be based on records that accurately reflect the work performed and support the distribution of employee salaries among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-Federal award. In addition, Title 2, Section 200.303(a), CFR, requires the District to maintain effective internal controls over the SEC. To ensure that charges are allowable, an appropriate system of internal controls requires that review and approval of program or grant expenditures be performed by personnel (e.g., the Exceptional Student Education Director) who possess adequate knowledge and experience of program requirements. Condition - For the 2023-24 fiscal year the District reported SEC expenditures totaling $1.8 million, including $1.5 million for salaries and benefits for 83 employees. To determine the propriety and allowability of SEC expenditures, we requested for examination District records supporting salaries and benefits totaling $628,953 charged to the SEC for 16 employees. Although we requested, District records were not provided to identify the work that the 16 employees performed to support the salaries and benefits charged to the SEC. Cause - The District did not always maintain records to identify the work employees performed to support the salaries and benefits charged to the SEC, and an employee with knowledge and experience of the SEC requirements was not required to, and did not, document review and approval of the salary and benefit charges. Effect - Absent effective procedures to document support for the distribution of employee salaries and benefits to the SEC, including the documented review and approval of those charges by the Exceptional Student Education Director or other personnel with knowledge and experience of SEC requirements, there is an increased risk that expenditures may be inappropriately charged to the SEC. We expanded our procedures to interview the 16 employees and determined that their salaries and benefits were appropriately charged to the SEC. However, our procedures cannot substitute the District’s responsibility to ensure that salaries and benefits charged to the SEC are properly supported. Recommendation - The District should establish procedures to ensure that District records accurately reflect the work performed to support the distribution of employee salaries and benefits charged to the SEC. Such procedures should require that the Exceptional Student Education Director or other personnel with appropriate knowledge and experience document review and approval of those charges. District Response - The District is in the process of reviewing and updating controls to ensure required time and effort logs are kept in the District's fiscal management system and routine submission of forms is enforced by the grant managers.