SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Coupeville School District No. 204 September 1, 2024 through August 31, 2025 2025-001 The District did not have adequate internal controls and did not comply with time-and-effort and procurement requirements. Assistance Listing Number and Title: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants 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: GT-03882 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2025, the District spent $219,471 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. 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.Time and Effort 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, such as a detailed timesheet. Time-and-effort documentation must also be signed and dated after employees complete the work. Procurement When using federal funds to procure goods and services, governments must apply the more restrictive requirements of federal, state or local laws by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. The District must maintain documentation showing the procurement process it performed. Federal regulations and District policy require the District to obtain price or rate quotations for personal services costing between $10,000 and $250,000. Description of Condition Time and Effort 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. Procurement The District’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the District did not follow its policy when procuring personal services for speech-language pathology and occupational therapy. The District paid two contractors a total of $134,444 in federal program funds. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance.Cause of Condition Time and Effort The District experienced turnover in key positions responsible for managing the program. As a result, the current staff were unable to locate supporting time-andeffort documentation. Procurement District staff were aware of procurement requirements but did not retain documentation of price or rate quotations to demonstrate compliance with procurement requirements. Effect of Condition Time and Effort The District did not obtain time-and-effort documentation for two employees whose payroll and benefits costs totaling $83,902 were charged to the program. 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 obtained and provided the signed time-and-effort records to support the payroll costs it charged to the program; therefore, we are not questioning these costs. Procurement Without effective internal controls or documentation, the District cannot demonstrate it complied with federal procurement standards and its own policy, allowed for full and open competition, received the best price or selected the most qualified provider.Recommendation Time and Effort We recommend the District establish and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining signed time-and-effort documentation timely. Procurement We recommend the District strengthen internal controls to ensure it complies with its policy and federal regulations for procuring personal services and that it maintains documentation to demonstrate it complied with federal procurement requirements. District’s Response The District acknowledges the above finding related to time-and-effort documentation and procurement requirements under the Special Education program cluster (CFDA 84.027 – Special Education Grants to States and CFDA 84.173 – Special Education Preschool Grants), pass-through award GT-03882 administered by OSPI. The District acknowledges that due to turnover in key positions, time-and-effort documentation for two employees whose payroll and benefits costs totaling $83,902 were charged to the program was not retained and readily available. The District has since obtained and provided signed time-and-effort records to the auditor to support all payroll costs charged to the program. To prevent recurrence, the Business Manager has implemented a monthly checklist to ensure time-and-effort certifications are completed and signed by applicable staff within required timeframes, in compliance with OSPI Bulletin 039-24 and 2 CFR Part 200, Subpart E. This checklist will be maintained on file as documentation of ongoing compliance. The District acknowledges that price or rate quotations were not retained for two contractors providing speech-language pathology and occupational therapy services, totaling $134,444 in federal program funds, as required for personal services contracts between $10,000 and $250,000 under 2 CFR Part 200, section 320, and Board Policy 6220.To address this, the Business Manager will provide written guidance to special education leadership and applicable staff by June 12, 2026, outlining price and rate quotation requirements for personal services contracts and the District's documentation retention obligations under Board Policy 6220 and federal procurement standards. Going forward, the Business Manager will verify that all personal services contracts procured with federal funds include required price or rate quotation documentation prior to execution. The District is committed to maintaining these strengthened internal controls to ensure full and ongoing compliance with federal program requirements under the Special Education program cluster. 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 Addendum to Bulletin 039-24, Guidelines for Charging Employee Compensation to Federal Grants establishes requirements for documenting time-and-effort, including fixed schedule systems. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement.