Finding 48666 (2022-004)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2022-12-20
Audit: 45473
Organization: Port Edwards School District (WI)

AI Summary

  • Core Issue: Lack of segregation of duties in the grant disbursement process increases the risk of errors or fraud.
  • Impacted Requirements: Internal controls for transaction review and payroll processing are insufficient, with no independent oversight beyond the Business Director.
  • Recommended Follow-Up: Review and improve the grant disbursement and payroll processes to ensure adequate segregation of duties and implement additional review procedures.

Finding Text

Elementary and Secondary School Emergency Relief Fund Segregation of Duties Federal Agency: U.S. Department of Education Federal Program Name: Elementary and Secondary School Relief Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number and Year: S425D210044 Federal Award Date 1/6/2021 and S425U210044 Federal Award Date 12/6/2021 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Entity Identifying Numbers: 2022-714508-DPI-ESSERFII-163, 2022-714508-DPI-ESSERFIII-165 Award Period: July 1, 2021 ? June 30, 2022 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 decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction. Condition: When a transaction does not require a purchase order, there is no formal review and approval by any District employee other than the Business Director to ensure the activity and cost is allowable under the grant. There is no separate review of the payroll transactions processed by the Business Director and subsequently included on the grant claims. Questioned costs: None Context: While performing audit procedures, it was noted that when transactions did not require a purchase order, the transaction was compared to the approved grant budget by the Business Director but there was no other review by the Superintendent or other positions responsible for the grant activity prior to payment. It was also noted that there was no review of the payroll costs reported on the grant claims or labor distribution reports to ensure only the proper employees and related costs were coded to grant. 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. Repeat Finding: No Recommendation: We recommend the District review its grant disbursement process to ensure that there is adequate segregation of duties in regards to initiating, authorizing, reviewing for grant allowability and approving purchases when purchase orders are not required, along with adding controls to ensure that the item purchased was received by the District. We also recommend the District review its payroll process and identify payroll tasks that could be reassigned to other district personnel or consider implementing additional review procedures specifically focused on payroll and related fringe benefit costs claimed on federal and state grants. Views of responsible officials: There is no disagreement with the audit finding.

Categories

Internal Control / Segregation of Duties Procurement, Suspension & Debarment Subrecipient Monitoring HUD Housing Programs Material Weakness

Other Findings in this Audit

  • 48656 2022-003
    Material Weakness
  • 48657 2022-006
    Material Weakness
  • 48658 2022-003
    Material Weakness
  • 48659 2022-006
    Material Weakness
  • 48660 2022-003
    Material Weakness
  • 48661 2022-006
    Material Weakness
  • 48662 2022-003
    Material Weakness
  • 48663 2022-006
    Material Weakness
  • 48664 2022-004
    Material Weakness
  • 48665 2022-005
    Significant Deficiency
  • 48667 2022-005
    Significant Deficiency
  • 625098 2022-003
    Material Weakness
  • 625099 2022-006
    Material Weakness
  • 625100 2022-003
    Material Weakness
  • 625101 2022-006
    Material Weakness
  • 625102 2022-003
    Material Weakness
  • 625103 2022-006
    Material Weakness
  • 625104 2022-003
    Material Weakness
  • 625105 2022-006
    Material Weakness
  • 625106 2022-004
    Material Weakness
  • 625107 2022-005
    Significant Deficiency
  • 625108 2022-004
    Material Weakness
  • 625109 2022-005
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.778 Medical Assistance Program $98,730
84.425 Education Stabilization Fund $97,656
84.010 Title I Grants to Local Educational Agencies $88,290
10.553 School Breakfast Program $52,546
10.555 National School Lunch Program $25,164
84.027 Special Education_grants to States $20,372
84.367 Improving Teacher Quality State Grants $17,119
84.424 Student Support and Academic Enrichment Program $10,000
84.048 Career and Technical Education -- Basic Grants to States $3,097
84.173 Special Education_preschool Grants $2,310
10.559 Summer Food Service Program for Children $880