The District did not have adequate internal controls for ensuring
compliance with time-and-effort requirements.
Assistance Listing Number and Title: 84.425 – COVID-19 – Educational
Stabilization Fund
Federal Grantor Name: U.S. Department of Education
Federal Award/Contract Number:
Pass-through Entity Name: Office of the Superintendent of
Public Instruction (OSPI)
Pass-through Award/Contract
Number:
84.425D-CEP Supp ESSER;
84.425U-138288; 84.425U-142142;
84.425U-145312; 84.425U-145823;
84.425V-6109; 84.425W-459563
Known Questioned Cost Amount: $47,853
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 $10,463,256 of its ESF awards. This included $191,184 in
the Elementary and Secondary School Emergency Relief Fund (ESSER II)
subprogram (84.425D), $10,099,901 in the American Rescue Plan Elementary and
Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram
(84.425U), $114,781 in the American Rescue Plan – Emergency Assistance to
Non-Public Schools (ARP EANS/EANS II) subprogram (84.425V) and $57,390 in
the American Rescue Plan Elementary and Secondary School Emergency Relief –
Homeless Children and Youth (ARP-HCY) 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.
Federal regulations also establish principles and standards for determining
allowable direct and indirect costs for federal awards. Additionally, federal
regulations and the Office of Superintendent of Public Instruction (OSPI) require
all costs charged to the program to comply with program requirements and
recipients to support this compliance with proper documentation that demonstrates
costs are allowable.
The District is also 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 OSPI require. Our audit found the
District transferred $47,853 of salary and benefit amounts to its ESSER III
(84.425U) award that were originally coded to other local, state and federal
programs, resulting in employees being charged to multiple federal programs
without appropriate time-and-effort documentation.
We consider this internal control deficiency to be a significant deficiency.
Cause of Condition
The District experienced turnover in the key position responsible for managing the
program. As a result, the current staff were unable to find any documentation
showing time-and-effort had been collected.
Effect of Condition and Questioned Costs
Using a statistical sample of all journal entry transactions that included both
accounts payable and payroll disbursements, we found nine out of 29 transactions
we tested had exceptions. Those exceptions were related to salaries and benefits
totaling $47,853 that were not supported by time-and-effort documentation. Based
on the projection of our sample, we identified an additional $651,791 in estimated
unsupported costs.
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 and likely
questioned costs that are more 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 this finding and has taken steps to address all time-andeffort
documentation issues. New procedures are now in place, including formal
time-and-effort tracking using the appropriate method—semiannual or monthly—
based on program guidelines and funding structure. The District has also
implemented a policy that requires all journal entries to include supporting
documentation. Each journal entry is reviewed and approved by multiple staff,
including Business Office staff and program directors, before posting. These
safeguards will ensure accountability, prevent future exceptions, and maintain
public trust.
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, section 403, Factors affecting
allowability of costs, describes the cost principles for how direct and indirect costs
should be charged to federal programs.
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.