Finding 398022 (2023-002)

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 - AMERICAN RESCUE PLAN - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425U PASS-THROUGH NUMBER 3505 AUDIT PERIOD - YEAR ENDED JUNE 30, 2023 Allowable Cost/Cost Principles Criteria: Office of Management and Budget (OMB) 2 CFR section 200, part E- Cost Principles established principles and standards for determining the allowable costs incurred by the District under Federal awards. Such costs are to conform to be necessary and reasonable for the performance of the Federal award and to be adequately documented. Condition: In our test of payroll expenditures, we identified unallowable costs totaling $3,000 were paid from the COVID-19 Education Stabilization Fund. The District paid two employees incentive pay that did not meet the requirements. A similar finding was reported in the previous audit. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $3,000 were paid from COVID-19 Education Stabilization funds for incentive pay. Questioned costs: The amount of questioned costs was $3,000. Context: An examination of COVID-19 Education Stabilization Fund payroll expenditures for 25 employees totaling $189,142 from a population of 620 employees totaling $4,755,642. Our sample was a statistically valid sample. Identification as a repeat finding: Yes Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District concurs with this finding. District Management understands the importance of following approved policies and ensuring any incentive pay meets the approved guidelines within such policies. The District will follow the recommendation of Arkansas Legislative Audit and contact the Arkansas Division of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures.