50000 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Material Weakness, Material Noncompliance) Federal Agency: U.S. Department of Education Pass-Through Entity: Southwest SELPA Program Name: Special Education Cluster (IDEA) Federal Financial Assistance Listing: 84.027, 84.027A, 84.173 Award Identification Numbers: 13379, 15197, 13430 Award Year: 2025 Compliance Requirements: A/B. Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria Per Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.430(g)(1), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 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 award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. A semi-annual certification may be completed if 100% of an employee’s time is charged to one Federal award. In addition, per Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.403(a), costs allowed to the federal program must be necessary and reasonable for the performance of the Federal award. Condition In our sample of 40 direct charges to the program, the District was not able to provide time accounting documentation for three employees with $20,687, of which $17,247 was attributed to Assistance Listing Number 84.027 (13379) and $3,441 was attributed to Assistance Listing Number 84.173 (13430), of salaries charged to the IDEA program. In our sample of 2 journal entries allocated to the program, there was one journal entry totaling $86,688, attributed to Assistance Listing Number 84.027A (15197), where the costs that were not allowable under the IDEA Cluster because the costs did not relate to services provided to students in the IDEA program. Cause The condition identified appears to have materialized due to the District’s lack of established procedures to ensure compliance with the requirements under Title 2, Code of Federal Regulations, Part 200, Subpart E, Sections 200.430 (g)(1) and 200.403(a). Effect The District has not complied with the requirements identified in Title 2, Code of Federal Regulations, Part 200, Subpart E, Sections 200.430(g)(1) and 200.403(a). Questioned Costs As a result of the condition identified above, a total of $107,376 in questioned costs were identified. Context/Sampling: Errors were identified in two samples: 1. A nonstatistical sample of 40 transactions out of 521 total transactions were selected for testing, which accounted for $234,682 of $582,881 of federal program expenditures. 2. A nonstatistical sample of two of nine journal entries which accounted for $569,683 of $608,048 of federal program expenditures. Repeat Finding No. Recommendation The District should review the requirements stated in Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.430 (i)(1)(vii) and implement a procedure to address the control deficiency currently identified with the District’s time accounting documentation as it relates to employees working on multiple activities or cost objectives. Additionally, the District should implement review procedures to ensure only allowable costs are charged to the program.