Finding 401848 (2023-002)

Criteria: The District is required to adhere to Part 200 of the Uniform Guidance. The following sections of the Uniform Guidance were not adhered to: 2 C.F.R. 200.302(B)(6)-(7) - Financial Management, 200.400-200.476 - Cost Principles; 200.430 - Compensation – personal services; 200.214 regarding suspension and debarment; 200.317-327 - Procurement standards, 200.113 - Mandatory Disclosures; 200.305 - Federal payment as well as Office of Grants Management, General Federal Entitlement Grant Guidance and Policies and Procedures for Reimbursement of Federal and Other Grant Expenditures Additionally, state requirements and statutes were not adhered to – N.J.SA. 18A:27-1 Appointment of teaching staff members; vote required; All consolidated grant applications specifically with respect to the Submit tab for Board Authorization in the Electronic Web-Enabled Grant (EWEG) system. That grant funds for the Education Stabilization Fund are spent in accordance with the requirements of the grant program, federal law, and applicable regulations. Condition: The New Jersey Department of Education issued a collaborative monitoring report in June 2023 which included the Title I grant and the CRRSA ESSER II grants under the Education Stabilization Fund. Their report disclosed certain programmatic findings as well as certain administrative/financial findings. Their report revealed that the Charter School did not have formal written procedures which address Uniform Grant Guidance requirements including the determination of allowability of costs in accordance with Federal cost principles and the terms and conditions of the Federal award and the mandatory disclosure of all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award. Also, the Board meeting minutes did not include the Charter School approvals of grant applications and/or budget amendments for certain grants including the dollar amount of the federal award and accept the funds upon subsequent approval of the applications by the New Jersey Department of Education. In addition, there was no documentation available to support that staff salaries, in whole or in part, charged to CRRSA ESSER II and wages incurred and charged to Title I and CRRSA ESSER Learning Acceleration for staff members who worked afterschool with students were approved by the Charter School Board of Trustees. Additionally, the required verification to determine whether vendors were debarred or suspended for purchase orders in amounts equal to or greater than $25,000 was not performed nor were procedures related to this verification implemented. Also, reimbursement requests for federal grants were not submitted on a monthly or at least a quarterly basis. Finally, our audit revealed that budgeted amounts recorded in the Charter School’s financial accounting software for the IDEA and CRRSA ESSER II funds did not accurately reflect the grant award or unexpended carryover funds. Cause: This is due, in part, to the limited number of personnel of the Charter School and that the personnel responsible for the federal IDEA, Title I and Education Stabilization Fund grants did not obtain sufficient training and adequate internal controls are not in place to ensure compliance. Effect or Potential Effect The Charter School was not in compliance with the applicable Uniform Guidance requirements, state requirements and statutes regarding the IDEA, Title I, and Educational Stabilization Fund grants. Recommendation: It is recommended that: 1) The District implement formal written procedures which address Uniform Guidance grant requirements including the determination of allowability of costs in accordance with Federal cost principles and the terms and conditions of the Federal award and the mandatory disclosure of all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award; 2) The Board meeting minutes include approvals of grant applications and/or budget amendments for federal grants including the dollar amount of the federal award and accept the funds upon subsequent approval of the applications by the New Jersey Department of Education. 3) Ensure that Board approval is obtained for staff members prior to their performance of federal grant funded activities and that Board minutes contain details such as the grant name and related account number, employee name, position and an hourly rate/salary; 4) procedures be implemented to ensure that the required verification to determine whether vendors were debarred or suspended for purchase orders in amounts equal to or greater than $25,000 is performed and that documentation of the verification is maintained on file; 5) reimbursement requests for federal grants and submitted on a monthly or at least a quarterly basis and 6) the District ensure that budgeted amounts and unexpended carryover funds are properly recorded in the Charter School’s financial accounting software for the IDEA and CRRSA ESSER II funds.