Finding 403100 (2023-002)

Repeat Finding: No Program Names/Assistance Listing Titles: Title I Grants to Local Educational Agencies; Special Education Cluster; COVID‐19 Education Stabilization Fund Assistance Listing Numbers: 84.010; 84.027; 84.027X; 84.425U Federal Award Numbers: S010A220003; H027A220007; H027X210007; S425U210038 Questioned Costs: 13,548; 22,644; 30,704 Federal Agency: U.S. Department of Education Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance, Material Weakness Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria In accordance with 2 CFR Part 200.303, the District is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the non‐ Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The District did not maintain effective internal control over activities allowed or unallowed and allowable costs/cost principles for several grants. Cause The District did not establish adequate controls over the preparation and/or retention of employee pay agreements. Effect The District did not have sufficient documentation to support the rate of pay for 13 employees paid from federal funds, and may have charged unallowable costs to the programs. Context During our review of payroll records, we noted the following: - For two of ten Title I employees reviewed, the rates of pay established in the payroll software were in excess of the approved contracts on file. The questioned cost of $13,548 represents the total excess amount paid to the two employees for the entire fiscal year. - For three of ten Special Education employees reviewed, the rates of pay established in the payroll software were in excess of the approved contracts on file. Additionally, for one of ten Special Education employees reviewed, the District could not locate an approved contract. The questioned cost of $22,644 represents the total excess amount paid to the four employees for the entire fiscal year. - For five of 20 Education Stabilization employees reviewed, the rates of pay established in the payroll software were in excess of the approved contracts on file. Additionally, for two of 20 Education Stabilization employees reviewed, the District could not locate approved contracts. The questioned cost of $30,704 represents the total excess amount paid to the seven employees for the entire fiscal year. The projected questioned costs for the Special Education Cluster could be in excess of $25,000. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should implement and enforce payroll procedures that ensure documentation is maintained which supports costs charged to federal programs. These procedures should include maintaining official, Board‐approved wage agreements for all employees, and implementing additional reviews of pay rates entered into the payroll software. Views of Responsible Officials See Corrective Action Plan.