Finding Text
2025-001 Lack of Time and Effort Documentation (Material Weakness) Federal Agency: U.S. Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: COVID19 - Education Stabilization Fund Assistance Listing Number: 84.425U Passed-through Identification: 20220801 Compliance Requirement: Activities Allowed or Unallowable and Allowable Costs/Cost Principals Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 200.430, compensation for personal services charged to federal awards must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable, and properly allocated, and must reasonably reflect the total activity for which the employee is compensated. Acceptable support includes personnel activity reports or equivalent documentation that demonstrates work performed and its connection to the federal program. Such documentation is necessary to establish that payroll costs are allowable, allocable, and properly charged to the award. Condition: As part of our testing, stipends charged to the ESSER III program were selected for review. Each individual tested was compensated based on a predetermined daily rate for a specified number of days worked. While employment contracts outlined the agreed-upon number of days and corresponding rates of pay, the School District did not maintain documentation (e.g., time and effort certifications or equivalent records) to substantiate that employees actually worked the days for which they were compensated. Cause: This issue appears to result from the School District’s reliance on contractual agreements and predetermined stipend structures as sufficient support for payroll charges, without implementing procedures to document and verify actual days worked. In addition, internal controls were not designed or operating effectively to require time and effort documentation or supervisory review to confirm that services provided were allowable and aligned with ESSER III program requirements. Effect: Due to the lack of documentation supporting the days worked, the School District is unable to demonstrate that the stipend payments charged to the ESSER III program were allowable, allocable, and properly supported. This represents noncompliance with federal requirements and increases the risk that unallowable or unsupported costs could be charged to the program. As a result, the tested costs totaling $30,800 have been identified as questioned costs. Questioned Costs: $30,800 Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District strengthen its internal controls over payroll and stipends charged to federal programs by establishing and enforcing procedures requiring documentation that accurately reflects both the time worked and the activities performed. Such procedures should include employee certifications (e.g., periodic or semi-annual, as appropriate) and documented supervisory review to verify that (1) the days worked align with amounts paid and (2) the activities performed are allowable and consistent with program objectives. Management should also ensure that all supporting documentation is retained in accordance with federal record retention requirements and is readily available for audit. Views of Responsible Officials: Management’s views and corrective action plan are included at the end of this report.