Finding 520609 (2024-006)

Material Weakness
Requirement
B
Questioned Costs
-
Year
2024
Accepted
2025-01-28

AI Summary

  • Core Issue: An audit adjustment was needed to correct the misclassification of ESSER expenditures between fiscal years.
  • Impacted Requirements: Internal controls are inadequate, leading to errors in grant expenditure payments based on quotes instead of invoices.
  • Recommended Follow-Up: Modify procedures to enforce proper controls, ensure staff training on accounting principles, and implement a two-person review for cash/accounts payable functions.

Finding Text

Finding #2024-006; Education Stabilization Fund – CFDA No. 84.425; Year Ended June 30, 2024 CONDITION: An audit adjustment was necessary to remove 2024-25 ESSER expenditures from the 2023-24 fiscal year. CRITERIA: Internal controls should be in place to ensure that allowable costs under Federal awards are determined in accordance with generally accepted accounting principles (GAAP). (See Finding #2024-003 in the Compliance section.) CAUSE: The cause of the lack of controls is primarily due to a lack of segregation of duties, as noted in Finding #2024-002 in Section II – Internal Control Over Financial Reporting. Ultimately, with limited staff in the business office and one of those members being new, the necessary monitoring and review procedures are lacking which leads to errors going undetected. EFFECT: The effect is that the internal controls over grant expenditures are not functioning as designed and the payment of expenditures based on quotes rather than invoices was permitted. RECOMMENDATION: We recommend that procedures be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff should be involved in the cash/accounts payable function and should understand proper accounting principles. When an error is discovered, the business manager should be notified and the error documented and corrected in a timely manner. Effective controls should include a two-person monitoring of cash/accounts payable. MANAGEMENT RESPONSE: Management agrees with the recommendations. The procedures in the business office will be modified and internal controls followed to ensure that payments based on quotes are prohibited. The business office staff will be more involved in the cash/accounts payable function and will be educated on proper accounting principles. If an error is discovered by the staff, the business manager will be notified and the error documented and corrected in a timely manner. Controls will include a two-person monitoring of cash/accounts payable.

Categories

Internal Control / Segregation of Duties Procurement, Suspension & Debarment Subrecipient Monitoring Allowable Costs / Cost Principles Reporting

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
84.027 Special Education Grants to States $69,750
10.553 School Breakfast Program $65,121
21.027 Coronavirus State and Local Fiscal Recovery Funds $20,441
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $16,477
84.425 Education Stabilization Fund $13,094
84.424 Student Support and Academic Enrichment Program $11,126
10.555 National School Lunch Program $10,928
84.010 Title I Grants to Local Educational Agencies $10,635
10.582 Fresh Fruit and Vegetable Program $7,314
21.019 Coronavirus Relief Fund $5,062
10.649 Pandemic Ebt Administrative Costs $653