FAC Explorer

Finding 540548 (2024-005)

Material Weakness
Requirement
AB
Questioned Costs
-
Year
2024
Accepted
2025-03-29
Audit: 350310
Organization: Independent School District #2909, Rock Ridge Public Schools (MN)
Auditor: Brady Martz & Associates PC

AI Summary

  • Core Issue: The District lacks proper approval processes for purchase orders and journal entries, leading to a material weakness in internal controls.
  • Impacted Requirements: This affects compliance with federal guidelines on allowable costs and activities.
  • Recommended Follow-Up: Establish clear policies for purchase order thresholds and implement a formal review process for journal entries.

Finding Text

Material Weakness in Internal Control Federal Program Education Stabilization Fund (AL 84.425U) Activities Allowed/Unallowed, Allowable Costs/Cost Principles Criteria A system of internal controls requires the review and signature of approval from the Superintendent on all purchase orders and all journal entry transactions requires the review and sign off by finance and payroll assistant Condition Two purchase orders were not signed by the Superintendent. Journal entry transactions were not reviewed or signed off on by anyone. Questioned Costs None Context A sample of 18 vendor disbursements were selected for testing. Two disbursements were not approved by the superintendent. We also noted journal entries charging expenses to the program lacked review and approval. Cause Management oversight. Effect The District has an increased risk of not being in compliance with federal activities allowed/unallowed and allowable costs/cost principles. Repeat Finding No. Recommendation The District should implement policies and procedures to establish a set dollar threshold for the purchase price that the Superintendent would need to sign on the purchase orders. They also need to establish a formal review and approval process for journal entry transactions. Views of Responsible Officials The District agrees with the recommendation.

Corrective Action Plan

Contact Person – Dr. Noel Schmidt, Superintendent Corrective Action Plan – The District staff will establish a journal entry review policy. A policy detailing thresholds for purchase order approval will also be implemented. Completion Date – Immediately

Categories

Allowable Costs / Cost Principles Internal Control / Segregation of Duties Procurement, Suspension & Debarment Material Weakness

Other Findings in this Audit

  • 540549 2024-006
    Significant Deficiency
  • 540550 2024-006
    Significant Deficiency
  • 540551 2024-006
    Significant Deficiency
  • 540552 2024-006
    Significant Deficiency
  • 540553 2024-006
    Significant Deficiency
  • 1116990 2024-005
    Material Weakness
  • 1116991 2024-006
    Significant Deficiency
  • 1116992 2024-006
    Significant Deficiency
  • 1116993 2024-006
    Significant Deficiency
  • 1116994 2024-006
    Significant Deficiency
  • 1116995 2024-006
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund $1.54M
84.010 Title I Grants to Local Educational Agencies $587,746
10.555 National School Lunch Program $554,040
84.048 Career and Technical Education -- Basic Grants to States $355,783
84.027 Special Education Grants to States $243,958
93.959 Block Grants for Prevention and Treatment of Substance Abuse $208,721
10.553 School Breakfast Program $156,671
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $79,703
84.060 Indian Education Grants to Local Educational Agencies $51,254
84.424 Student Support and Academic Enrichment Program $35,662
10.559 Summer Food Service Program for Children $16,140
84.173 Special Education Preschool Grants $3,767
10.558 Child and Adult Care Food Program $3,130