Finding Text
The District did not have adequate internal controls and did not
comply with time-and-effort requirements.
Assistance Listing Number and Title: 84.027, Special Education Grant to
States
84.173, Special Education
Preschool Grants
Federal Grantor Name: U.S. Department of Education
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of Superintendent of Public
Instruction (OSPI)
Pass-through Award/Contract
Number:
84.027A-GT-0852;
84.173A-GT-0852;
84.173 – GT-1196
Known Questioned Cost Amount: $1,415,509
Prior Year Audit Finding: N/A
Background
During fiscal year 2024, the District spent $1,842,531 in federal funds from the
Special Education program cluster. This program ensures students with disabilities
receive free and appropriate public education with specially designed instruction
that addresses their unique needs.
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 it charges 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 employees
complete the work.
If the District initially allocates payroll expenditures to federal programs based on
a budgeted or estimated time or amounts, then it must compare and adjust estimated
payroll time-and-effort records to actual time at least quarterly, if the difference is
10% or more. At year-end, payroll records must match time-and-effort
documentation to ensure the District only charges federal programs for work
directly supporting them.
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 key positions responsible for monitoring the
program. As a result, the current staff were unable to demonstrate former
employees dedicated the necessary time and resources to reconciling time charged
to the program and ensuring it was supported with time-and-effort documentation.
Effect of Condition and Questioned Costs
The District did not obtain time-and-effort documentation for 19 employees whose
payroll and benefit costs totaling $1,415,509 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. Further, the District cannot assure federal
grantors that payroll costs it charged to the program were accurate and valid.
Federal regulations require the State Auditor’s Office to report known questioned
costs that are greater than $25,000 for each type of compliance requirement. We
question costs when we find the District does not have adequate documentation to
support expenditures.
Recommendation
We recommend the District implement 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 and has implemented new procedures to
ensure strong internal controls over time-and-effort documentation. This issue
primarily occurred during a period of staff turnover. The District has since hired
experienced personnel who are now overseeing federal program compliance. We
have implemented a compliant time-and-effort tracking system consistent with
OSPI and federal requirements. Documentation—whether semiannual
certifications or monthly reports, as applicable—is collected, reviewed, and
retained in accordance with the type of funding allocation. All documentation is
reviewed by both the Business Office and program administrators to ensure
accuracy. Monthly monitoring and required training for relevant staff are now
embedded into our internal processes. The district is committed to ensuring
accuracy and accountability in all federally funded programs.
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