Finding Text
Finding 2022-003 Federal Agency: U.S. Department of Education Federal Program: Elementary and Secondary School Emergency Relief (ESSER) Assistance Listing Number: 84.425U Award Period: 09/01/2021 - 08/31/2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters - Allowable Costs and Cost Principles Criteria: The School?s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls to ensure expenditures are charged to proper programs and allocated in accordance with the federal grant requirements. The objectives of the Education Stabilization Fund are to prevent, prepare for, and respond to the COVID-19 pandemic. During fiscal year 2022, the School expended $227,096 in federal funding from the Elementary and Secondary School Emergency Relief (ESSER) fund subprogram awarded by the American Rescue Plan (ARP) Act (ESSER III). Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations and the Washington State Office of Superintendent of Public Instruction (OSPI) require the School to have adequate time-and-effort documentation to support all payroll costs charged to the ESSER III award. Depending on the number and the types of activities employees perform, time-and-effort documentation can be a semi-annual certification or monthly personnel activity reports, such as a detailed timesheet. Condition: The School?s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. The School did not have time and effort documentation for a portion of time charged to the ESSER III award for 10 employees. We consider this internal control deficiency to be a significant deficiency. Questioned Costs: None. Context: Our procedures included examining payroll charges for all employees for the months of September 2021, March 2022, and August 2022. Attestations on time-and-effort reports provided for all employees were dated January 2023. Cause: While the School had a method to track allowable payroll costs charged to the program, it did not follow its written policy and procedure regarding the collection of time-and-effort documentation. Effect: By not keeping proper time-and-effort records, the School cannot demonstrate compliance with OSPI?s documentation requirements to support payroll costs charged to federal programs. In addition, it cannot assure the federal grantor that payroll costs charged to the ESSER III award were accurate or valid. The School provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the School follow its own documented controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant.