Finding 2023-001 – Education Stabilization Fund – AL No.’s 84.425D & 84.425U
Department of Education
Massachusetts Department of Elementary and Secondary Education
Noncompliance and Significant Deficiency Related to Internal Control over Compliance of the Major Program
Criteria: 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 of the Town 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: Control deficiencies related to disbursements were noted as a result of the testing of internal controls over payroll. Specifically, a sample of payroll disbursements charged to the major program were tested in order to determine if adequate internal controls were in place. As a result of the testing of payroll disbursements charged to the programs, the employees tested were found to not have adequately approved and or documented employee payroll rate agreements.
Cause: Appointment letters for some staff tested could not be located. I believe this is due not to non-compliance but turnover within the office and not being able to locate paper files.
Effect or Potential Effect: Due to the significant deficiencies and noncompliance in internal controls noted above, there is a risk of inappropriate rate of pay and/or wages being paid.
Identification as a Repeat Finding: 2022-001
Questioned Costs: Questioned costs could not be determined.
Recommendation: The Town of Bellingham should improve the internal controls over Activities Allowed/Allowable Costs by ensuring employee’s payroll rate agreements are approved by an appropriate level of management and in a timely manner.
Responsible for Corrective Plan: Director of Finance, Schools
Estimated Completion Date: December 2024
Action Taken: The Director of Finance will ensure that all employees paid have an approved and documented pay rate or salary from either an appointment letter, School Committee salary worksheet, and/or Collective Bargaining Agreement.