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 84.027, Special Education Grants to States 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 (OSPI) Pass-through Award/Contract Number: AD-7401, AD-7403, AD-7652, AD-8093, AD-9930 AD-8942, AD-HNI25-140 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background Title I 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 fiscal year 2025, the District spent $1,798,938, in federal funds from Title I. Special Education The objective of the Special Education program is to ensure students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. During fiscal year 2025, the District spent $1,032,533 in federal funds from the Special Education program. 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 payrolls costs it charges to the programs 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. Description of Condition The District’s internal controls were ineffective in ensuring it supported all salaries and benefits charged to the programs with appropriate time-and-effort documentation, as federal regulations and OSPI require. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Turnover in the District’s key position responsible for managing both programs resulted in an oversight in obtaining required time-and-effort documentation. Current staff believed the prior staff member responsible for retaining this documentation did not adequately obtain time-and-effort documentation because they did not fully understand time-and-effort documentation requirements. Current staff are unsure if the documentation was ever obtained and were unable to locate most time-and-effort documentation. Effect of Condition Title I The District did not obtain required time-and-effort documentation for eight employees we tested whose payroll costs totaling $424,256 was charged to the program. Specifically, three employees had no time-and-effort documentation and the remaining five employees were missing time-and-effort documentation for half of the year. Special Education The District did not obtain required time-and-effort documentation for nine out of 12 employees we tested whose payroll costs totaling $645,116 was charged to the program. Specifically: Seven employees had no time-and-effort documentation One employee did not have time-and-effort documentation for half of the year One employee charged their time to more than one federal program, but the District only obtained quarterly time-and-effort documentation instead of monthly, as required 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. Further, the District cannot assure federal grantors that payroll costs it charged to the program were accurate and valid. During the audit, the District supported these payroll costs by providing alternative documentation to show the employees worked on the programs; 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 time-and-effort documentation timely. District’s Response The District will strengthen its procedures for documenting time and effort for employees whose salaries or benefits are charged to federal or other restricted funding sources. Employees will be required to complete the appropriate time and effort documentation in a timely manner and in accordance with applicable grant requirements and District procedures. Financial Services, in coordination with the grant administrator and supervisors, will establish a process to monitor the submission and completion of time and effort records. Supervisors will review documentation for completeness and accuracy, and Financial Services will follow up on missing or late records. The District will provide guidance to employees and supervisors regarding time and effort requirements, including when documentation is required, who is responsible for completing and approving it, and the importance of submitting records timely. Documentation will be retained in an organized manner and made available for audit or monitoring purposes. 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, Time and Effort (T&E) Reporting, establishes requirements for documenting time-and-effort, including fixed schedule systems.