Finding Text
U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES- AL NUMBER 84.010A PASS-THROUGH NUMBER 4702 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 2024-002. Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR part 200, subpart D - Establish, document, and maintain effective internal controls over the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award. Such controls are necessary and reasonable for the performance of the Federal Award. Condition: During our test of 21 Title I program expenditures, we identified 7 expenditures totaling $15,471 that lacked supporting documentation. Additionally, the District claimed $6,867 of indirect costs in excess of the allowable amount. Cause: Management did not properly oversee internal control activities of the District. Additionally, the District experienced significant employee turnover in key positions. Effect: The District was unable to provide supporting documentation resulting in questioned costs. Questioned costs: $22,338. Context: Of the 21 expenditures tested totaling $69,047, 7 expenditures totaling $15,471 lacked supporting documentation. Indirect costs of $6,867 claimed in excess of the total allowable amount of $47,739. Identification as a repeat finding: Yes Recommendation: The District should establish and maintain internal controls that will initiate, authorize, record, process, and report transactions in compliance with federal awards. Additionally, adequate supporting documentation should be maintained for all expenditures. Views of responsible officials: The District acknowledges this finding and agrees with the recommendation. The following corrective actions have been taken or are underway to address both the documentation deficiencies and the excess indirect cost claim: 1. Title I Expenditure Documentation • The District has implemented a dedicated pre-payment checklist for all Title I and federal program expenditures. Before any disbursement is processed, staff must attach an approved purchase order, vendor invoice, or equivalent documentation confirming allowability and amount. • The Title I program coordinator will review and sign off on all Title I expenditure documentation before payment is submitted to the Finance Director for final approval. • The Finance Director will conduct a monthly review of Title I expenditures to verify that all transactions are documented, allowable, and properly classified under 2 CFR Part 200. 2. Indirect Cost Rate Compliance • The District will review the approved indirect cost rate at the beginning of each grant year and establish an internal cap to prevent claiming in excess of the allowable amount. • Indirect cost claims will be reconciled against the approved rate quarterly. If an overage is identified during the year, it will be corrected in the same grant year. • The District will work with the Arkansas Department of Education to resolve the $6,867 in questioned indirect costs, including any required repayment or reallocation. 3. Federal Award Compliance Training • All staff involved in administering federal awards will receive training on 2 CFR Part 200 requirements, including allowable costs, documentation standards, and indirect cost limitations, prior to the start of each grant year. Training attendance will be documented.