Finding Text
2024-001 The District did not have adequate internal controls and did not comply with time-and-effort requirements.
Assistance Listing Number and Title: 84.010 – Title I Grants to Local Education Agencies
Federal Grantor Name: U.S. Department of Education
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of the Superintendent of Public Instruction (OSPI)
Pass-through Award/Contract Number:
GT-01224
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting academic standards and reside in areas with high concentrations of children from low-income families. During fiscal year 2024, the District spent $1,582,423 in federal funds from Title I.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
The District is responsible for ensuring it supports all payroll costs charged to the program with adequate time-and-effort documentation, as required by federal regulations and the awarding agency. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report, such as a detailed timesheet. Time-and-effort documentation must also be signed and dated after the work is completed.
Description of Condition
The District’s internal controls were ineffective for ensuring it supported all salaries and benefits it charged to the program with appropriate time-and-effort documentation, as federal regulations and the Office of Superintendent of Public Instruction (OSPI) require.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
The District experienced turnover in the key position that was responsible for collecting time-and-effort documentation. The employee responsible during the fiscal year did not have adequate knowledge of the OSPI time-and-effort requirements needed to effectively review time-and-effort documentation and ensure compliance with applicable federal requirements.
Effect of Condition
The District did not obtain adequate time-and-effort documentation for five employees whose salaries, benefits and associated indirect costs totaling $578,986 it charged to the program.
Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the awarding agency’s documentation requirements to support costs charged to federal programs.
During the audit, the District supported these payroll costs by providing alternative documentation to show the employees worked on the program; therefore, we are not questioning these costs.
Recommendation
We recommend the District strengthen and follow internal controls to ensure employees understand time-and-effort requirements and that it complies with federal and OSPI requirements for obtaining signed time-and-effort documentation timely.
District’s Response
Central Kitsap School District concurs with the issued finding. Although time and effort documentation was received from all employees whose salaries were charged to the program, CKSD did not ensure the correct forms, certifying the full time period, were received from those employees certifying on a semi-annual basis. Procedures will be modified to ensure time and effort participants are educated on the requirements and are completing the correct forms timely. Procedures will also ensure key personnel receive proper training on time and effort policies and requirements.
Auditor’s Remarks
We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs.
Office of Superintendent of Public Instruction Addendum to Bulletin 048-17, Guidelines for Charging Employee Compensation to Federal Grants establishes requirements for documenting time-and-effort, including fixed schedule systems.