Finding Text
Federal Agency: US Department of Education
Federal Program Name: Elementary and Secondary School Emergency Relief
Assistance Listing Number: 84.425D, 84.425U
Federal Award Identification Number and Year: S425U210044
Pass-Through Agency: Wisconsin Department of Public Instruction
Pass-Through Number(s): 2022-714368-DPI-ESSERFII-163, 2022-714368-DPI-ESSERFIII-165
Award Period: 3/13/2020-9/30/2024
Type of Finding:
• Material Weakness in Internal Control over Compliance
Criteria or Specific Requirement: Segregation of duties is an internal control intended to prevent or detect the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction.
Condition: The director of business services has the capability of doing all functions of the general disbursement and payroll processes. There is a bookkeeper that helps with some of the steps in these processes, but the bookkeeper is part-time and the director of business services will complete these tasks in her absence. The director of business services prepared the annual report and there was no review of the report by someone other than the preparer prior to submission to Wisconsin Department of Public instruction. Accordingly, this does not allow for a proper segregation of duties for internal control purposes.
Questioned Costs: None
Context: When identifying internal controls over compliance related to reporting (annual report) and allowable costs and allowable activities (general disbursements and payroll), it was noted that the director of business services position handled all the responsibilities of those functions and there were no formal, documented internal controls over compliance in place to review that procedures were performed as required and no review of the work completed by someone other than the preparer.
Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District’s operations.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. District could incorrectly report amounts and other data on the annual report.
Repeat Finding: No.
Recommendation: We recommend the District review its processes related to general disbursements for grants and implement a control where someone other than the director of business services is reviewing disbursements coded to grant project codes to help ensure compliance with grant requirements. For payroll transactions, we recommend implementing a control where someone other than the director of business services is reviewing who is coded to the grant on a routine basis and that the payroll allocation to the grant is appropriate and supported by time and effort documentation. We also recommend that the District implement a formal review process over the reporting requirement relating to ESSER annual reports.
View of Responsible Officials: There is no disagreement with the audit finding.