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, 2025 2025-002. 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 Title I program payroll and nonpayroll expenditures, we identified five expenditures totaling $6,419 that lacked supporting documentation. Additionally, we identified one employee who was overpaid $884 and one employee who received a $5,000 stipend plus fringe benefits of $1,132 without documented approval by the District. 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: $13,435 Context: Sample of 16 nonpayroll expenditures totaling $33,908 from a population of 154 totaling $407,730. Sample of 4 employees' gross payroll expenditures totaling $74,302 from a population of 31 employees totaling $763,065. Our sample was not a statistically valid sample. 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 the documentation deficiencies. 1. Title I Expenditure Documentation • All Title I payroll and non-payroll expenditures must be supported by complete documentation, including approved purchase orders, invoices, time-and-effort records, or equivalent, before any payment is processed. The Title I program coordinator will sign off on each transaction before submission to the Finance Director. • The Finance Director will conduct a monthly review of all Title I expenditures to verify allowability and documentation completeness under 2 CFR Part 200. 2. Stipend and Additional Compensation Approval • Any stipend, bonus, or additional compensation charged to a federal program must be approved by board resolution and reviewed for allowability under the applicable federal award before payment by the Federal Programs Coordinator. 3. Overpayment Recovery and Prevention • Payroll staff will verify active employment status for all Title I-funded employees at the start of each pay period. Any separation, leave of absence, or status change will be immediately reported to the payroll processor to prevent overpayments. 4. Federal Award Compliance Training • All staff involved in administering Title I and other federal programs will receive annual training on 2 CFR Part 200 requirements, including allowable costs, documentation standards, and approval procedures, before the start of each grant year. Attendance will be documented.