Finding Text
2025-002 The District did not have adequate internal controls and did not comply with time-and-effort requirements. Assistance Listing Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: S010A230047 S367A230045 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. During the 2024-25 school year, the District spent $1,907,696 in Title I program funds. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The District is responsible for ensuring it supports all payroll costs it charges to the program with adequate time-and-effort documentation, as required by federal regulations and the awarding agency. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report (PAR), such as a detailed timesheet. Time-and-effort documentation must also be signed and dated after employees complete the work. Description of Condition The District’s internal controls were ineffective for ensuring it supported all salaries and benefits it charged to the program with appropriate time and effort documentation, as federal regulations and OSPI require. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition District staff were aware of the federal time-and-effort certification requirements, but overlooked the requirements in some cases and did not ensure that the time-and-effort documentation was dated. Effect of Condition The District did not obtain adequate time-and-effort documentation for two out of 14 employees tested whose payroll costs totaling $212,505 it charged to the program. Specifically, the two employees completed annual time-and-effort certifications for time worked in the program but did not complete either a semiannual certification or monthly PAR as OSPI requires. The employees also did not date the annual certifications to demonstrate they were signed after the work was completed. Additionally, using a nonstatistical sample, we found one out of nine employees tested (11%) whose salaries and benefits totaling $5,966 were not supported by adequate time-and-effort documentation. Specifically, the employee had one monthly PAR out of 10 months tested that they did not date to demonstrate it was signed after they completed the work. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the awarding agency’s documentation requirements to support costs charged to federal programs. During the audit, the District provided alternative documentation to support the payroll costs it charged to the program; therefore, we are not questioning these costs. Recommendation We recommend the District implement and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining signed and dated time-and-effort documentation timely. District’s Response The district will make sure all staff are listed on the Semi-Annual Certifications. Staff with braided funding will have a PAR with monthly verifications. Auditor’s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs. Office of Superintendent of Public Instruction Bulletin 039-24, Financial Resources establishes requirements for documenting time-and-effort.