Finding Text
2022-003 Nonpayroll Supporting Documentation CFDA No: 84.041 Program Name: Impact Aid Award Number: N/A Federal Agency: U.S. Department of Education Pass-Through Grantor: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: N/A Summary of Finding: Material Weakness in internal control over major programs Repeat Finding? No Condition For seven out of the 40 expenditures selected, the District did not retain vendor invoices or equivalent documents to support the expenditures. For 10 out of the 40 expenditures selected, the District did retain a written purchase order for the expenditure. Criteria Arizona Revised Statutes 15-271 states: "A. The auditor general shall determine the accounting systems, accounting methods and accounting procedures for school districts to use. B. The auditor general in conjunction with the department of education shall prescribe a uniform system of financial records (USFR) for all school districts to use each fiscal year." USFR VI-B Source documents states in part: "Source documents are used to initiate accounting transactions and should be retained to support each entry recorded in the accounting records." Uniform Guidance ?200.333 Retention requirements for records states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report..." Cause Internal controls were not developed to ensure new staff was properly trained to maintain accounting records in a complete manner. In addition, controls were not monitored to ensure complete documentation was retained. Effect Financial information the District uses to make decisions and reports provided to the state for oversight could have been materially misstated throughout the fiscal year. Recommendation The District should procure a consultant or modify the organizational chart of the District Finance Office to ensure individuals with the skills, knowledge and expertise prepare, review and retain required source documentation. In addition, material transactions of he fiscal year should be reviewed and replacement documentation should be obtained to replace missing invoice information.