Finding Text
The District did not have adequate internal controls and did not comply with time-and-effort requirements.
Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund
Federal Grantor Name: U.S. Department of Education
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of Superintendent of Public Instruction
Pass-through Award/Contract Number: 84.425D
84.425U – 137163
84.425V
84.425W
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2024, the District spent a total of $819,569 of its ESF awards. This included $40,747 in the Elementary and Secondary School Emergency Relief (ESSER II) subprogram (84.425D), $504,158 in the American Rescue Plan – Elementary and Secondary School Relief (ARP ESSER III) subprogram (84.425U), $260,377 in the American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS II) subprogram (84.425V), and $4,802 in the American Rescue Plan – Elementary and Secondary School Emergency Relief – Homeless and Children Youth (ARP HCY II) subprogram (84.425W).
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 federal regulations and the awarding agency require. Depending on the number and type 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 Transition to Kindergarten program, which was funded using ESF, with appropriate time-and-effort documentation, as federal regulations and OSPI require.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
Although District staff tracked allowable payroll costs in a spreadsheet, they were unaware of the requirement to obtain time-and-effort documentation supporting actual time worked in the program.
Effect of Condition
The District did not obtain time-and-effort documentation for three employees whose payroll and benefit costs totaling $189,781 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 costa charged to federal programs. Further, the District cannot assure the federal grantor that payroll costs charged to the program were accurate and valid.
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 establish and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining signed time-and-effort documentation timely.
District’s Response
The district acknowledges the finding regarding inadequate internal controls and non-compliance with time-and-effort requirements. We take this concern seriously and are fully committed to addressing them promptly to ensure we are following all applicable federal and state regulations.
To do so, the district has taken the following steps:
1. Internal Controls: we are reviewing and improving our internal control procedures related to grant documentation and management.
2. Time-and-Effort Reporting: we are ensuring our policies are current and will be training staff to ensure time-and-effort documentation is accurate and up to date in accordance with federal and state guidelines.
3. Monitoring: we are enhancing our monitoring procedures to ensure we have consistent application of our internal controls across departments.
Auditor’s Remarks
We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our 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.