Finding Text
Auburn School District No. 408
September 1, 2021 through August 31, 2022
2022-002 The District’s internal controls were inadequate for ensuring
compliance with requirements for time-and-effort documentation.
Assistance Listing Number and Title: 84.010 – Title I Grants to Local
Educational Agencies
Federal Grantor Name: U.S. Department of Education
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of Superintendent of Public
Instruction
Pass-through Award/Contract
Number:
270255 (5189/2030), 270277
(5189/2020), 270572 (5189/5040),
270925 (5189/2070), 270929
(5189/1380), 270931 (5189/1480),
270932 (5189/2060), 204003
(5100-5185)
Known Questioned Cost Amount: $48,646
Background
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. The District
spent $4,222,764 in federal funds through its Title I program during fiscal year
2022. Employee salaries and benefits made up about 86 percent of program
expenditures.
Federal regulations require recipients to establish and follow internal controls that
ensure compliance with program requirements. These controls include
understanding award requirements and monitoring the effectiveness of established
controls.
The District is responsible for ensuring it supports all payroll costs charged to the
program with adequate time-and-effort documentation, as required by federal
regulations, the awarding agency, and the Office of Superintendent of Public
Instruction (OSPI). Depending on the number and type of activities employees
perform, time-and-effort documentation can be a semiannual certification or
monthly personnel activity report, such as a detailed timesheet.
Time-and-effort documentation must also be signed and dated after the work has
been completed.
Description of Condition
Our audit found the District’s internal controls were ineffective for ensuring it
supported all salaries and benefits charged to the federal Title I program with
appropriate time-and-effort documentation as required. The District could not
provide time-and-effort documentation for two employees, a portion of whose
salaries and benefits were erroneously charged to the program.
We consider this deficiency in internal control to be a significant deficiency.
This issue was not reported as a finding in the prior audit.
Cause of Condition
The District did not dedicate the necessary time and resources to reconciling and
ensuring time charged to the program was supported with time-and-effort
documentation. District staff responsible for collecting time-and-effort
documentation relied on staff assignments and budget allocations established at the
beginning of the year to identify employees requiring time-and-effort
documentation.
Effect of Condition and Questioned Costs
Without adequate time-and-effort records, the District cannot assure federal
grantors that payroll costs charged to the program were accurate and valid. We used
statistical sampling to select and test 41 employees whose salaries and benefits
made up about 58 percent of total payroll expenditures charged to the program. We
found two employees whose salaries and benefits were not supported by time-andeffort
documentation. These charges totaled $47,229 in known questioned costs and
$1,417 in related indirect costs. From this, we identified an additional $277,644 in
estimated overpayments.
Recommendation
We recommend the District establish and follow internal controls to ensure it
complies with federal and OSPI requirements for time-and-effort documentation.
Specifically, we recommend the District obtain and review all time-and-effort
documentation to ensure time reported agrees to actual hours worked in the
program for all Title I staff and supports payroll costs charged to the program, as
OSPI requires.
District’s Response
The District understands the importance of internal controls in regards to time and
effort reporting using federal funds. Our internal controls were not sufficient
enough to identify errors in time and effort reporting. The district has implemented
stronger internal controls in order to reconcile and comply with federal and OSPI
requirements.
Auditor’s Remarks
We appreciate the District’s commitment to resolving the issue. We will review the
condition 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 (OSPI) Addendum to Bulletin
048-17, Federal Fiscal Policy, establishes requirements for documenting
time-and-effort for employees that work in federal programs.