Finding Text
Seattle School District No. 1 September 1, 2024 through August 31, 2025 2025-002 The District charged unallowable costs to the Title I program. 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 the Superintendent of Public Instruction Pass-through Award/Contract Number: GT-03162 | DA Known Questioned Cost Amount: $1,517 Prior Year Audit Finding: N/A Background The objective of Title I is to improve the teaching and learning of children, who are at risk of not meeting academic standards and who reside in areas with high concentrations of children from low-income families. During fiscal year 2025, the District spent $17,990,023 in federal funds from Title I. Federal regulations establish principles and standards for determining allowable direct and indirect costs for federal awards. All costs that recipients charge to the program must comply with program requirements and recipients must support this compliance with proper documentation that demonstrates costs are allowable. Description of Condition Although the District’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, the District miscoded an invoice to the grant. As a result, the District claimed reimbursement for an unallowable activity. Cause of Condition District staff said an employee changed the cost center in the District’s system, which resulted in the invoice being charged to the grant. However, the expense was also marked as “no grants approval” necessary in the system and therefore it was not routed to the designated supervisor knowledgeable of Title I allowable activities for review. Effect of Condition and Questioned Costs Using a statistical sample, we found one out of 29 invoices we tested totaling $1,517 was not allowable to charge to the program. Based on the projection of our sample, we identified an additional $110,241 in estimated unallowable costs. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the District has not complied with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the District ensure all costs it charges to federal programs are allowable. The District should review any costs that were moved into Title I from a nonfederal program cost center to ensure they are allowable. District’s Response The District concurs with the audit finding. The District acknowledges that one of the invoices reviewed during the audit did not include the required approval steps. The District would like to note, however, that this issue was identified through internal review and self-reported to the auditor upon discovery. The District has several internal controls in place to mitigate the risk of unallowable purchases; however, no control process is entirely preventative. The District will reinforce existing requirements by reminding all District users that after-the-fact changes are not permitted. Any instances identified in the future will be addressed individually as they are discovered. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken 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, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs.