Federal Program
COVID-19 - Education Stabilization Fund ALN 84.425; passed through the Pennsylvania Department of Education
Condition/Cause
We tested a sample of 8 nonpayroll invoices charged to the Education Stabilization Fund. For 1 out of the 8 invoices tested, the invoice was miscoded to the grant and should have been charged to a different program. Controls at the District did not catch this miscoding prior to the audit.
The Board of Directors approves all salaried positions that are funded by the Education Stabilization Fund. For one of the individuals charged to the program, the Board did not approve their position as a grant funded position. Instead, a different individual was approved but not charged to the grant. Controls at the District did not catch this miscoding prior to the audit; however, the individual charged to the grant was in a position that was allowable under the grant requirements.
Recommendation
We recommend the District review their internal controls over allowable activities and allowable costs charged to the Education Stabilization Fund to ensure they are designed and operating to detect coding errors that may result in noncompliance with grant requirements.
Management Response
Objective
Address the identified issues related to the misallocation of costs and lapses in internal controls within the Education Stabilization Fund program.
1. Immediate Actions
• Correct the miscoded invoice immediately, ensuring that the $2,613 erroneously charged to the Education Stabilization Fund is properly allocated to the correct program.
• Conduct a thorough review of all nonpayroll invoices charged to the Education Stabilization Fund to identify and rectify any other miscoding errors.
2. Internal Controls Enhancement
• Review and strengthen internal controls over allowable activities and costs within the Education Stabilization Fund program.
• Implement a systematic process for verifying the appropriateness of each cost before it is charged to the grant, including a cross-check against grant agreements and Board approvals.
3. Board Approval Process
• Establish a clear and documented process for obtaining Board approval for salaried positions funded by the Education Stabilization Fund.
• Ensure that all individuals charged to the program have received explicit approval from the Board, and that the approval is well-documented.
4. Training and Awareness
• Provide training to relevant staff involved in coding and approving expenses related to the Education Stabilization Fund.
• Enhance awareness among employees about the importance of accurately coding expenses and obtaining proper approvals.
5. Review of All Salaried Positions
• Conduct a comprehensive review of all salaried positions funded by the Education Stabilization Fund, ensuring that each position aligns with Board approvals and grant requirements.
• Verify that individuals charged to the program have the necessary approvals and qualifications.
6. Documentation and Record-Keeping
• Establish a centralized and well-maintained repository for all documentation related to Education Stabilization Fund expenditures.
• Ensure that records of Board approvals, coding decisions, and supporting documentation for all expenses are readily accessible for audit purposes.
7. Periodic Internal Audits
• Implement a schedule for periodic internal audits specifically focused on the Education Stabilization Fund program.
• Conduct random checks and audits to verify the accuracy of coding and compliance with internal controls.
8. Reporting and Transparency
• Develop a reporting mechanism to keep the Board of Directors and relevant stakeholders informed of expenditures under the Education Stabilization Fund.
• Periodically report on the status of internal controls and any corrective actions taken.
9. Continuous Monitoring:
• Establish a continuous monitoring process to detect and address any deviations from established internal controls promptly.
• Implement real-time alerts or notifications for potential coding errors or deviations from approved positions.
10. External Review
• Consider engaging external auditors to perform an independent review of the strengthened internal controls and corrective actions taken.
• Seek recommendations for further improvements and best practices.
By implementing these corrective actions, we aim to enhance internal controls, ensure compliance with grant requirements, and prevent the misallocation of funds within the Education Stabilization Fund program. Regular monitoring and a commitment to continuous improvement will be critical for sustained success.