Finding Text
Management acknowledged its responsibility to establish and maintain effective internal controls to reasonably assure compliance with federal statutes, regulations and terms and conditions of federal awards and controls relating to preparing the Schedule of Expenditures of Federal Awards (the Schedule), as required by Uniform Guidance (2 CFR § 200.303(a)), in the audit engagement letter. Furthermore, Uniform Guidance (2 CFR Subpart F § 200.510(b)) requires the auditee prepare the Schedule for the period covered by the District’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. Due to insufficient controls over the monitoring of grant activity, the District did not retain appropriate support on the dates of the determination to charge prior year costs to the American Rescue Plan Elementary and Secondary School Emergency Relief Fund (ARP ESSER) grant in the amount of $678,544. The grant award was for $1,019,060, which had a grant period spanning calendar years 2020 through 2024. Lack of maintaining such documentation could result in expenditures determined to be unallowable under grant guidelines and funds required to be returned. Ineffective internal controls related to federal grants could lead to noncompliance with program requirements. Additionally, the determination of unallowable costs could have an adverse effect on future grant awards by the awarding agency or agencies in addition to an inaccurate assessment of major federal programs that would be subjected to audit. District management should implement a system to review the Schedule for errors and omissions as well as a method to monitor the related internal controls over compliance with federal grant requirements. This will help ensure the Schedule is complete and accurate, major federal programs are accurately identified for audit, and internal controls over compliance requirements are implemented and operating effectively.