2022-001 MATERIAL WEAKNESS Condition: The District's internal control system did not prevent or detect material errors in the financial accounting records, which are utilized to prepare the District's financial statements. The District failed to transfer dedicated maintenance and operation millage revenues of $725,843 from the general fund to the capital projects fund which is included in the other aggregate funds. The financial statements were subsequently corrected by adjusting entries during audit fieldwork. District Response: The District concurs with this finding. The District has debriefed internally and established a plan complete with appropriate action steps and safeguards to ensure that the dedicated maintenance and operation millage revenues are transferred from the general fund to the capital project fund in a timely manner. The District will ensure due care is exercised to ensure accurate and reliable financial reporting. The point of contact for this would be Kelvin Gragg, Rose Smith, and Ashley Granberry. This Correction should be corrected on or before June 30, 2022. 2022-002 PAYROLL EXPENDITURES Condition: In our sample of payroll expenditures, we identified undocumented compensation of $7,685 and improperly awarded incentive pay of $4,700 paid from Federal funds without proper documentation or requirements. District Response: The District acknowledges the finding and would take this opportunity to explain the circumstances surrounding this material weakness. While not an excuse, it in part explains the conditions under which these instances of undocumented compensation occurred. The District has been impacted by multiple staff changes in the Business Office. The District has employed and/or contracted for payroll services with four (4) persons and for the role of Business Manager with three (3) persons just during this calendar year alone. The District has taken steps to stabilize the workforce in the Business Office. In addition to addressing the human capital issues, the District will provide additional monitoring support to ensure the implementation of the existing internal controls over program expenditures. The district has already taken steps to recoup compensation that was improperly awarded and paid. As recommended, the district will contact the Arkansas Division of Elementary and Secondary (DESE) for guidance regarding this matter. The district began addressing these is July 2022 and have since made the necessary changes as of September 2022. The point of contact for this would be Rose Smith, Ashley Granberry, Lucretia James and Kelvin Gragg.