Finding 578128 (2022-002)

Significant Deficiency
Requirement
AB
Questioned Costs
$1
Year
2022
Accepted
2023-11-13

AI Summary

  • Core Issue: The District lacked effective internal controls for time-and-effort documentation, leading to unsupported payroll costs charged to the Title I program.
  • Impacted Requirements: Federal regulations mandate accurate time-and-effort records to validate payroll expenses, which were not maintained for two employees, resulting in questioned costs of $48,646.
  • Recommended Follow-Up: The District should implement stronger internal controls to ensure compliance with federal and OSPI requirements, including thorough review of time-and-effort documentation for all Title I staff.

Finding Text

Auburn School District No. 408 September 1, 2021 through August 31, 2022 2022-002 The District’s internal controls were inadequate for ensuring compliance with requirements for time-and-effort documentation. Assistance Listing Number and Title: 84.010 – Title I Grants to Local Educational Agencies 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: 270255 (5189/2030), 270277 (5189/2020), 270572 (5189/5040), 270925 (5189/2070), 270929 (5189/1380), 270931 (5189/1480), 270932 (5189/2060), 204003 (5100-5185) Known Questioned Cost Amount: $48,646 Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. The District spent $4,222,764 in federal funds through its Title I program during fiscal year 2022. Employee salaries and benefits made up about 86 percent of program expenditures. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding award 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, the awarding agency, and the Office of Superintendent of Public Instruction (OSPI). Depending on the number and type of activities employees perform, time-and-effort documentation can be a semiannual certification or monthly personnel activity report, such as a detailed timesheet. Time-and-effort documentation must also be signed and dated after the work has been completed. Description of Condition Our audit found the District’s internal controls were ineffective for ensuring it supported all salaries and benefits charged to the federal Title I program with appropriate time-and-effort documentation as required. The District could not provide time-and-effort documentation for two employees, a portion of whose salaries and benefits were erroneously charged to the program. We consider this deficiency in internal control to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition The District did not dedicate the necessary time and resources to reconciling and ensuring time charged to the program was supported with time-and-effort documentation. District staff responsible for collecting time-and-effort documentation relied on staff assignments and budget allocations established at the beginning of the year to identify employees requiring time-and-effort documentation. Effect of Condition and Questioned Costs Without adequate time-and-effort records, the District cannot assure federal grantors that payroll costs charged to the program were accurate and valid. We used statistical sampling to select and test 41 employees whose salaries and benefits made up about 58 percent of total payroll expenditures charged to the program. We found two employees whose salaries and benefits were not supported by time-andeffort documentation. These charges totaled $47,229 in known questioned costs and $1,417 in related indirect costs. From this, we identified an additional $277,644 in estimated overpayments. Recommendation We recommend the District establish and follow internal controls to ensure it complies with federal and OSPI requirements for time-and-effort documentation. Specifically, we recommend the District obtain and review all time-and-effort documentation to ensure time reported agrees to actual hours worked in the program for all Title I staff and supports payroll costs charged to the program, as OSPI requires. District’s Response The District understands the importance of internal controls in regards to time and effort reporting using federal funds. Our internal controls were not sufficient enough to identify errors in time and effort reporting. The district has implemented stronger internal controls in order to reconcile and comply with federal and OSPI requirements. Auditor’s Remarks We appreciate the District’s commitment to resolving the issue. We will review the condition 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 (OSPI) Addendum to Bulletin 048-17, Federal Fiscal Policy, establishes requirements for documenting time-and-effort for employees that work in federal programs.

Categories

Questioned Costs Allowable Costs / Cost Principles Subrecipient Monitoring

Other Findings in this Audit

  • 1684 2022-003
    Material Weakness
  • 1685 2022-002
    Significant Deficiency
  • 1686 2022-002
    Significant Deficiency
  • 1687 2022-002
    Significant Deficiency
  • 1688 2022-002
    Significant Deficiency
  • 1689 2022-002
    Significant Deficiency
  • 1690 2022-002
    Significant Deficiency
  • 1691 2022-002
    Significant Deficiency
  • 1692 2022-002
    Significant Deficiency
  • 1693 2022-001
    Material Weakness
  • 1694 2022-001
    Material Weakness
  • 1695 2022-001
    Material Weakness
  • 1696 2022-001
    Material Weakness
  • 578126 2022-003
    Material Weakness
  • 578127 2022-002
    Significant Deficiency
  • 578129 2022-002
    Significant Deficiency
  • 578130 2022-002
    Significant Deficiency
  • 578131 2022-002
    Significant Deficiency
  • 578132 2022-002
    Significant Deficiency
  • 578133 2022-002
    Significant Deficiency
  • 578134 2022-002
    Significant Deficiency
  • 578135 2022-001
    Material Weakness
  • 578136 2022-001
    Material Weakness
  • 578137 2022-001
    Material Weakness
  • 578138 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.555 National School Lunch Program $7.86M
84.010 Title I Grants to Local Educational Agencies $3.94M
10.553 School Breakfast Program $1.75M
32.009 Covid-19 - Emergency Connectivity Fund Program $850,897
84.367 Supporting Effectve Instruction State Grants $591,514
84.365 English Language Acquisition State Grants $563,404
84.334 Gaining Early Awareness and Readiness for Undergraduate Programs $496,692
10.582 Fresh Fruit and Vegetable Program $280,494
84.027 Special Education_grants to States $229,401
10.559 Summer Food Service Program for Children $174,815
84.424 Student Support and Academic Enrichment Program $170,835
84.041 Impact Aid $161,267
93.566 Refugee and Entrant Assistance_state Administered Programs $158,143
93.959 Block Grants for Prevention and Treatment of Substance Abuse $140,548
84.060 Indian Education_grants to Local Educational Agencies $107,509
84.048 Career and Technical Education -- Basic Grants to States $105,623
12.U01 Jrotc Program $93,622
84.173 Special Education_preschool Grants $61,238
93.778 Medical Assistance Program $59,679
84.425 Covid-19 - Education Stabilization Fund $47,558
21.027 Covid -19 - Coronavirus State and Local Fiscal Recovery Funds $35,950
84.377 School Improvement Grants $6,410
10.649 Covid-19 - Pandemic Ebt Administrative Costs $5,814
10.665 Schools and Roads - Grants to States $5,785
93.434 Every Student Succeeds Act/preschool Development Grants $3,290