Finding Text
Finding 2023-001 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES
Type: Material Weakness in Internal Control / Noncompliance
Program: COVID 19 Education Stabilization Fund (ALN 84.425D – ESSER II Formula, ESSER II Section 98c Learning Loss, ALN 84.425U – ESSER III Formula)
Condition: The District was unable to provide documentation that identified wages, by employee, that were charged to Education Stabilization Fund grants.
Criteria: As detailed in 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must, “Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated.”
Cause: Management failed to maintain adequate documentation of wages and related fringe benefit allocations.
Effect: Approximately $1,340,000 of expenses charged to Education Stabilization Fund were not able to be tested/substantiated.
Context: Wages and the related fringe benefits were allocated to Education Stabilization Fund grants through a series of journal entries rather than the typical process of allocating wages via the payroll system based on hours each employee spent in each function or cost center. Documentation of how the journal entries were prepared was not maintained. Consequently, wages and the related fringe benefits allocated via journal entries could not be reconciled to payroll records.
Recommendation: We recommend that the District establish internal controls to ensure that appropriate support for journal entries is developed and maintained.
Management’s Resp: We are in agreement with this finding.