Finding Text
Finding Number: 2025‐004 Repeat Finding: No Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Indian School Equalization Program 15.042 A24AV00760 N/A Special Education Cluster (IDEA) 84.027 A24AV00760 N/A Administrative Costs Grant for Indian School 15.046 A24AV00760 N/A Federal Agency(ies): U.S. Department of Interior Pass‐Through Agency(ies): Bureau of Indian Education Type of Finding: Noncompliance, Significant Deficiency Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Indian tribes and tribal organizations may, without the approval of the Bureau of Indian Affairs (BIA), expend funds provided under a self‐determination contract for purposes identified in 25 USC 450j‐l(k), to the extent that the expenditure of the funds is supportive of a contracted program (25 USC 450j‐l(k)). These guidelines require internal controls over expenditures of federal monies, including the use of requisitions or purchase orders, to ensure expenditures comply with federal regulations and guidelines (25 CFR 39; 25 CFR 900). Uniform Guidance requires that non‐federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with laws, regulations, and program compliance requirements. Control activities should include proper authorization of expenditures and reviews of operating performance. Further, School management is responsible for establishing and maintaining internal controls over payroll that are adequate to ensure that all payroll disbursements are properly processed and recorded in accordance with Internal Revenue Service (IRS) regulations. Condition The School did not always follow its disbursement, payroll, and financial reporting process. Additionally, employees were not paid in accordance with contracts and time cards. Cause The School lacked adequate internal controls over disbursements, journal entries, and payroll. Controls in place did not always operate effectively and were not followed. Effect The School was not in compliance with federal regulations and guidelines. The School’s internal controls over disbursements, payroll, and journal entries were not adequate to ensure that all financial activities were properly processed, recorded and supported. Context - For one of 16 journal entries reviewed, the School did not maintain documentation to support the transaction for adjusting a cost initially charged to the Administrative Costs Grant to the Indian School Equalization Program. - For one of 45 disbursements reviewed, the purchase order was created after the invoice was received. - For one of 45 disbursements reviewed, the School could not provide supporting documentation including the purchase order, receiving report, and canceled check. - For three of 45 disbursements reviewed, there was no evidence of client clerical checks or cancellation of supporting documentation, and no evidence documenting receipt of services. - For two of 40 employee payroll records reviewed, the employee pay could not be recalculated. - For one of 10 credit card transactions reviewed, supporting documentation for the receipt was not maintained by the School. - The School miscoded $481,980 in expenditures of the Indian School Equalization Program to the Special Education Cluster (IDEA). The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should develop and implement stronger internal controls over its accounting records, specifically those of disbursements and payroll to ensure that all financial activities are properly processed and recorded. The School should maintain documentation to support all disbursements and ensure disbursements are allowable. The School should follow its established procedures for processing payroll and not circumvent the process by suppressing payroll. Additionally, the School must take care to ensure employee pay is properly calculated and that journal entries are properly supported. The School’s personnel should obtain additional training as needed. Additionally, the School should take more care to ensure they are in compliance with federal regulations and guidelines, as put forth in 25 CFR 39; 25 CFR 900 and in 25 USC 450j‐l(k). Views of Responsible Officials See Corrective Action Plan.