Finding 390810 (2023-003)

2023-003 Improve Controls and Documentation over Payroll Process Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Local Entitlement AL Number(s): 84.027/84.173 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Education Stabilization Fund Cluster Award Name: Elementary and Secondary Emergency Relief Funds AL Number(s): 84.425D/84.425U Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Treasury Cluster/Program: State and Local Fiscal Recovery Funds Award Name: State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance - Material Weakness Criteria or Specific Requirement The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context In fiscal year 2023, our sample testing disclosed that amounts paid to employees could not be recalculated and documentation to ensure amounts paid were complete and accurate was not available. Effect or Potential Effect We were unable to conclude on the allowability, validity, or completeness of payroll charged to the grants, and as a result there is a risk that amounts charged to federal awards may not be allowable in accordance with applicable cost principles.Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Questioned Number(s) Name of Federal Program or Cluster Costs 84.027/84.173 Special Education Cluster $2,105,321 84.425D/84.425U Education Stabilization Fund Cluster $5,695,516 21.027 State and Local Fiscal Recovery Funds $442,467 Cause Weaknesses in the design and operation of controls over payroll processing in the School Department. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 003. Recommendation The School Department must re-design the internal controls surrounding how payroll is processed to provide assurance that processing is complete, accurate and valid. Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.