Finding Text
2024-003 Lack of Documentation to Support Distribution of Wages (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: Special Education Cluster Assistance Listing Number(s): 84.027, 84.173, 84.027X, 84.173X Passed-through Identification: 20221035, 20221036, 20230212, 2024188, 20240189, 20240190, 20240191, 20240199, 20240308 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the School Administrative Unit, as a recipient of Federal funds, must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, under 2 CFR 200.430, it states that charges to the federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) be incorporated into the official records of the non-Federal entity, (3) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, and (4) support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal ward or a federal award and non-Federal award. Condition: During current year testing, it was noted that the School Administrative Unit did not maintain semi-annual certifications for employees whose salaries were charged in whole or in part to federal programs for the second half of the fiscal year. Cause: The absence of certifications appears to be the result of oversight in the School Administrative Unit’s year-end grant compliance procedures. Specifically, management did not have an established monitoring process to ensure that semi-annual certifications were completed and retained for the full fiscal year. Effect: Without proper semi-annual certifications, the School Administrative Unit cannot fully demonstrate that salaries charged to federal programs were based on actual work performed for those programs. This creates the risk of questioned costs under the Uniform Guidance and may jeopardize the allowability of a portion of payroll expenditures charged to federal awards. Questioned Costs: $355,027 Identification as Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat of finding 2023-002. Recommendation: We recommend the School Administrative Unit strengthen its grant compliance procedures by implementing a process to ensure that all required semi-annual certifications are completed timely and retained for each reporting period. This may include assigning responsibility to a specific individual for collecting certifications, establishing reminders at fiscal mid-year and year-end, and periodically reviewing files to confirm compliance. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.