Finding 555345 (2024-002)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2024
Accepted
2025-04-18
Audit: 353992
Organization: Newhall School District (CA)
Auditor: Eide Bailly LLP

AI Summary

  • Core Issue: The District failed to provide financial records that match the annual expenditure report for ESSER funding.
  • Impacted Requirements: This violates federal regulations requiring retention of financial records for three years.
  • Recommended Follow-Up: Implement procedures to ensure all federal reports are backed by proper financial documentation and stored centrally for easy access.

Finding Text

50000 – ESSER Reporting Federal Agency: U.S. Department of Education (ED) Pass-Through Entity: California Department of Education Program Name: Education Stabilization Fund Federal Financial Assistance Listing: 84.425D, 84.425U, 84.425W Compliance Requirement: Reporting Criteria or Specific Requirements Per Title 2, Code of Federal Regulations, Part 200, Subpart D, Section 200.334, financial records and supporting documents pertinent to a Federal award must be retained for a period of three years from the date of submission of expenditure reports to the awarding agency or passthrough entity. Condition Material Weakness in Internal Control over Compliance - The District was unable to provide financial records or supporting documents that agreed to the annual expenditure report submitted to the California Department of Education. Cause The identified condition appears to have materialized due to insufficient procedures related to the retention of financial records. Effect The District has not complied with the requirements identified in Title 2, Code of Federal Regulations, Part 200, Subpart D, Section 200.334. Questioned Costs There are no questioned costs associated with the condition identified. Context The condition was identified through inquiry with District personnel and through review of available supporting documentation. Repeat Finding (Yes or No) No. Recommendation The District should ensure that all federal reports are supported by financial reports. These records should be stored in a centralized location made accessible to necessary staff members and should be retained in accordance with necessary timeframes for compliance with federal and state regulations.

Corrective Action Plan

Corrective Action Plan and Views of Responsible Officials Views of Responsible Officials The District acknowledges the audit finding regarding insufficient retention of financial records supporting the annual ESSER expenditure reports submitted to the California Department of Education. We understand that maintaining accurate and accessible documentation is essential to federal compliance under Title 2, Code of Federal Regulations (CFR) §200.334. The District takes full responsibility for this oversight and is taking immediate steps to strengthen its internal controls and documentation practices. Corrective Action Plan 1. Reason for the Finding: This issue arose due to high turnover in the position responsible for federal reporting. As a result, institutional knowledge and documentation practices were disrupted, making it difficult to locate supporting financial records for the annual ESSER expenditure report. While the quarterly reports submitted throughout the year were accurate and properly supported, the annual report was not fully aligned with available documentation due to incomplete record retention during the staffing transitions. 2. Actions to be Taken to Correct the Issue: Centralized Document Management System: The District will implement a centralized, secure electronic document management system (e.g., Google Drive, SharePoint, or a financial records database) specifically for tracking and retaining federal program documentation. All financial records supporting ESSER and similar federal grants will be stored here and categorized by funding source, fiscal year, and reporting period. Standard Operating Procedure (SOP): A formal SOP for federal grants management will be created and distributed to all relevant departments. This will include clear guidelines for documentation, record retention timelines, and roles/responsibilities for financial reconciliation and audit readiness. Staff Training: District staff responsible for federal program management and reporting will be trained on the new SOP, federal compliance regulations (including CFR §200.334), and the use of the document management system. Refresher trainings will be conducted annually or as needed. Pre-Submission Review: A dual review process will be instituted where both the Business Services and Federal Programs teams confirm the availability and accuracy of supporting documentation before any reports are submitted to oversight agencies. 3. Timeline for Implementation: All corrective actions will be in place within 90 days. The centralized document storage system and SOPs will be finalized and rolled out within 60 days. Staff training will be completed within the following 30 days. Immediate measures to retain ESSER documentation have already been initiated.

Categories

Subrecipient Monitoring Material Weakness Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 555346 2024-002
    Material Weakness
  • 555347 2024-002
    Material Weakness
  • 555348 2024-002
    Material Weakness
  • 555349 2024-002
    Material Weakness
  • 1131787 2024-002
    Material Weakness
  • 1131788 2024-002
    Material Weakness
  • 1131789 2024-002
    Material Weakness
  • 1131790 2024-002
    Material Weakness
  • 1131791 2024-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.010 Title I Grants to Local Educational Agencies $1.22M
93.575 Child Care and Development Block Grant $201,925
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $198,023
84.365 English Language Acquisition State Grants $156,672
84.424 Student Support and Academic Enrichment Program $24,260
84.027 Special Education Grants to States $1,346
84.173 Special Education Preschool Grants $371
84.425 Education Stabilization Fund $312