Finding 478149 (2023-001)

Significant Deficiency
Requirement
AB
Questioned Costs
$1
Year
2023
Accepted
2024-07-10
Audit: 314827
Organization: Town of Wayland (MA)
Auditor: Marcum LLP

AI Summary

  • Core Issue: Lack of supervisory approval for 16 out of 23 payroll transactions and insufficient documentation for vendor expenditures.
  • Impacted Requirements: Compliance with federal cost principles and internal controls over disbursements.
  • Recommended Follow-up: Strengthen internal controls to ensure federal awards are used for allowable activities and costs.

Finding Text

2023-001 Improve Controls over Disbursements Federal Agency: U.S. Department of Education Cluster/Program: Education Stabilization Fund Award Name: COVID-19 – Elementary and Secondary School Emergency Relief (ESSER III) Fund and COVID-19 – American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) AL Number(s): 84.425D/84.425U Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance and Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context Supervisory approval was not obtained for 16 of 23 payroll transactions tested. Further, there was no documented evidence that multiple individuals were involved in 13 out of 16 vendor expenditures charged to the grant and one journal entry charging expenditures to the grant. Cause Weaknesses in the design and operation of controls. Effect or Potential Effect Due to the weaknesses in internal controls noted above, there is a risk that disbursements may be awarded to vendors in a manner that is not consistent with federal requirements. Known or likely questioned costs are reported equal to $214,332, as follows: AL Known or likely Questioned Number(s) Name of Federal Program or Cluster Costs 84.425D/84.425U COVID-19 – Elementary and Secondary School Emergency Relief Fund $214,332 Recommendation The Town should address the weaknesses in internal controls noted above in order to provide reasonable assurance that federal awards are expended only for allowable activities, and that the costs services charged to federal awards are allowable and in accordance with the applicable cost principles. Views of Responsible Official Management agrees with the finding. Planned Corrective Action Management’s corrective action plan is included at the end of this report.

Corrective Action Plan

AUDIT FINDINGS 10 SECTION II- FINANCIAL STATEMENT FINDINGS None. SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS 2023-001 Improve Controls over Disbursements Federal Agency: U.S. Department of Education Cluster/Program: Education Stabilization Fund Award Name: COVID-19 – Elementary and Secondary School Emergency Relief (ESSER III) Fund and COVID-19 – American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) AL Number(s): 84.425D/84.425U Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Compliance and Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. 2 41 Cochituate Road ∙ P.O. Box 408 ∙ Wayland, Massachusetts 01778-0408 Condition and Context Supervisory approval was not obtained for 16 of 23 payroll transactions tested. Further, there was no documented evidence that multiple individuals were involved in 13 out of 16 vendor expenditures charged to the grant and one journal entry charging expenditures to the grant. Cause Weaknesses in the design and operation of controls. Corrective Action The organization has identified the need for and implemented fiscal controls for personnel (payroll) expenditures which include, but are not limited to, proper authorization by the Director of Special Education and/or Assistant Superintendent for each Federal grant disbursement in the form of signature for approval of payment kept on file in the dated bi-weekly payroll folder. Secondly, the Director of Finance reviews, approves, and authorizes all bi-weekly payrolls electronically in two ways: through electronic signature in Munis and through email to the payroll clerk, kept on file in the dated bi-weekly warrant folder (hard copy). Lastly, the School Committee votes and approves all bi-weekly payrolls at their regularly held public sessions, which are captured in meeting minutes and as a hard copy kept on file in the Payroll office. The organization has identified the need for and implemented fiscal controls for non-personnel expenditures which include, but are not limited to, proper authorization by school principals, directors of curriculum and instruction, directors of grants and special education/student services, and/or Assistant Superintendent for each Federal grant disbursement in the form of signature on the invoice indicating “ok to pay” or through authorization via email and kept on file in the appropriate grant folder and electronic Accounts Payable weekly warrant. Secondly, the Director of Finance reviews, approves, and authorizes all requisitions before they are converted to purchase orders through electronic signature in Munis, and approves all Accounts Payable weekly warrants. Lastly, the School Committee votes and approves all Accounts Payable warrants at their regularly held public sessions, which are captured in meeting minutes and as a hard copy kept on file in the Accounts Payable office. Name of Contact Person: Susan Bottan, Director of Finance and Operations, susan_bottan@waylandps.org, 508-358-3750 Projected Completion Date Fiscal controls have been established and are being followed, as of July 10, 2023 since the Director of Finance and Operations began employment at Wayland Public Schools.

Categories

Questioned Costs Allowable Costs / Cost Principles Significant Deficiency

Other Findings in this Audit

  • 1054591 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.019 Coronavirus Relief Fund $124,930
84.027 Special Education_grants to States $102,557
84.425 Education Stabilization Fund $100,000
10.555 National School Lunch Program $82,063
97.044 Assistance to Firefighters Grant $42,143
84.367 Improving Teacher Quality State Grants $19,275
84.173 Special Education_preschool Grants $14,030
84.365 English Language Acquisition State Grants $10,691
97.042 Emergency Management Performance Grants $9,729
84.424 Student Support and Academic Enrichment Program $5,574
84.010 Title I Grants to Local Educational Agencies $2,437