Finding 4494 (2023-002)

Findings and Questioned Costs – Major Federal Award Programs Audit Finding 2023-002 Significant Deficiency Federal Agency: U.S. Department of Education Passthrough Entity: Missouri Department of Elementary and Secondary Education Assistance Listing Number and Federal Program: 84.425 Education Stabilization Fund – Elementary and Secondary Education Compliance Requirements: B. Allowable Costs and L. Reporting Criteria: In accordance with 2 CFR part 200.302, the District is required to maintain financial management systems to trace funds to expenditures to establish that funds have been used according to Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system must provide for records that identify adequately the source and application of funds for federally-funded activities, among other conditions. The reporting of the federal expenditures should be supported by these records. Amounts may not be expended from project funds on an arbitrary basis. Thus, it is critical to have a process in place to regularly reconcile underlying financial records with the grant reports. This will also help ensure correct revenue is being reported and underlying costs in the financial records are supported. Statement of Condition: During the course of our audit, we noted that the District requested reimbursement for expenses that were not properly supported by the necessary project codes and source codes in the financial management system. The grant payment request for reimbursements for respective Federal grants were not reconciled to the District’s general ledger and the classification of expenditures did not agree to what was detailed on the grant payment request for reimbursements. Statement of Cause: Control procedures were not in place to reconcile the general ledger project codes to the grant payment request for reimbursement for the grant. Statement of Effect: Without timely reconciliations and monitoring processes, grant expenditures can be omitted or overstated on submitted grant payment request for reimbursements or other grant noncompliance can be overlooked. This could result in missed funding or noncompliance with grant agreements which could lead to adverse conditions with the grantors. Questioned Costs: No questioned costs. Perspective Information: This appears to be a systemic problem because after reviewing other grants received by the District, the correct project codes and source codes were not being properly utilized. Identification of Repeat Findings: Not a repeat finding. Recommendation: We recommend that the District develop written procedures that require grant payment request for reimbursements and any other required reporting to be reconciled to the internal accounting records prior to report submission. The District must be able to specifically identify and provide support for every expenditure that is reimbursed. A review should be performed to ensure the expenditures are properly classified and allowable. This process should be attainable if each grant utilizes the proper project codes and sources codes as required by the grant agreements. The reconciliation should be monitored by someone not responsible for the recording and procedures should be put in place to ensure the reconciliation is being performed timely. Views of Responsible Officials: The District will correct and resubmit previous ASBRs, and will institute proactive measures where the Superintendent, or other designated District representative, will verify that the District’s accounting software records mirror the accurate totals for expense codes, including project codes, before future reimbursement requests for federal funds are submitted. See Correction Action Plan.