FAC Explorer

Finding 31686 (2022-001)

Significant Deficiency Repeat Finding
Requirement
ABCEIJN
Questioned Costs
-
Year
2022
Accepted
2023-03-17
Audit: 35912
Organization: Starmont Community School District (IA)
Auditor: Hacker Nelson & CO PC

AI Summary

  • Core Issue: The District lacks adequate segregation of duties, increasing risks related to cash safeguarding and financial statement accuracy.
  • Impacted Requirements: Management must ensure internal controls are in place to prevent errors and dishonesty by separating incompatible tasks.
  • Recommended Follow-Up: Review and enhance operating procedures to improve internal controls, acknowledging the limitations of the current staff size.

Finding Text

Finding 2022-001 Overlapping Duties Condition: The District?s offices are not large enough to permit an adequate segregation of duties for effective internal controls. Management has not separated incompatible activities of personnel, thereby creating risks related to the safeguarding of cash and the accuracy of the financial statements. Criteria: Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the District?s financial statements. Cause: The concentration of closely related duties and responsibilities such as the recording and processing of cash receipts, preparing grant expenditure reports, preparing financial information for posting and analyzing financial information by a small staff makes it impossible to establish an adequate system of automatic internal checks on the accuracy and reliability of the accounting records. Effect: This deficiency results in a reasonable possibility that the District would not be able to detect misstatements that would be material in relation to the financial statements and/or federal award programs in a timely period by employees in the normal course of performing their assigned functions. Recommendation: The District should review the operating procedures of the District offices to obtain the maximum internal control possible under the circumstances utilizing currently available staff. While we do recognize that the District is not large enough to permit a segregation of duties for effective internal controls, we believe it is important the Board be aware that this condition does exist. Views of Responsible Officials and Planned Corrective Actions: Management is cognizant of this limitation and will implement additional procedures where possible.

Corrective Action Plan

CORRECTIVE ACTION PLAN March 1, 2023 To: U.S. Department of Agriculture and U.S. Department of Education Starmont Community School District respectfully submits the following corrective action plan for the year ended June 30, 2022. Name and address of independent public accounting firm: Hacker, Nelson & Co., CPAs 123 W. Water Street Decorah, IA 52101 Audit period: Year ended June 30, 2022. The finding from the June 30, 2022 schedule of findings and questioned costs is discussed below. The finding is numbered consistently with the numbers assigned in the schedule. FINDING - FEDERAL AWARDS PROGRAM AUDIT U.S. Department of Agriculture: ? Clustered programs: Child Nutrition Cluster: o Federal Assistance Listing Number 10.553-USDA-School Breakfast Program o Federal Assistance Listing Number 10.555-USDA-Emergency Operation Cost During COVID-19 o Federal Assistance Listing Number 10.555-USDA-National School Lunch Program o Federal Assistance Listing Number 10.559-USDA-Summer Food Service Program for Children U.S. Department of Education: ? Education Stabilization Fund (ESF): o Federal Assistance Listing Number 84.425D: ? COVID-19 Elementary and Secondary School Emergency Relief (ESSER II) o Federal Assistance Listing Number 84.425U: ? American Rescue Plan - Elementary and Secondary School Emergency Relief (ARP ESSER III) o Federal Assistance Listing Number 84.425W: ? American Rescue Plan - Elementary and Secondary School Emergency Relief-Homeless Children and Youth Page 2 Internal control deficiencies: See Finding 2022-001 Recommendation: The District should review the operating procedures of the District offices to obtain the maximum internal control possible under the circumstances utilizing currently available staff. While we do recognize that the District is not large enough to permit a segregation of duties for effective internal controls, we believe it is important the Board be aware that this condition does exist. Action Taken: Management is cognizant of this limitation and will implement additional procedures where possible. If the U.S. Department of Agriculture or U.S. Department of Education have questions regarding this plan, please call Katie Taylor, District Secretary/Treasurer, at 563-933-4598. Sincerely yours, Katie Taylor Starmont Community School District District Secretary/Treasurer cc: Christi L. Meyer, CPA

Categories

Internal Control / Segregation of Duties

Other Findings in this Audit

  • 31687 2022-001
    Significant Deficiency Repeat
  • 31688 2022-001
    Significant Deficiency Repeat
  • 31689 2022-001
    Significant Deficiency
  • 31690 2022-001
    Significant Deficiency
  • 31691 2022-001
    Significant Deficiency
  • 608128 2022-001
    Significant Deficiency Repeat
  • 608129 2022-001
    Significant Deficiency Repeat
  • 608130 2022-001
    Significant Deficiency Repeat
  • 608131 2022-001
    Significant Deficiency
  • 608132 2022-001
    Significant Deficiency
  • 608133 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
10.555 National School Lunch Program $427,744
84.010 Title I Grants to Local Educational Agencies $110,479
10.553 School Breakfast Program $96,491
84.027 Special Education_grants to States $32,479
84.367 Improving Teacher Quality State Grants $17,122
93.575 Child Care and Development Block Grant $16,080
84.424 Student Support and Academic Enrichment Program $10,000
84.425 Education Stabilization Fund $9,099
84.048 Career and Technical Education -- Basic Grants to States $8,842
96.631 Developmental Disabilities Projects of National Significance $496
10.559 Summer Food Service Program for Children $309
10.574 Team Nutrition Grants $162