Finding 578818 (2023-002)

MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE AND MATERIAL NONCOMPLIANCE – U.S. DEPARTMENT OF EDUCATION, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, SPECIAL EDUCATION CLUSTER (INCLUDING COVID-19 FUNDING) – FEDERAL ALN 84.027 AND 84.173 2023-002 Internal Control Over Compliance and Material Noncompliance With Federal Allowable Costs Requirements Criteria – 2 CFR § 200.405 specifies a cost is allocable to a particular federal award if the goods or services involved are chargeable or assignable to that federal award in accordance with relative benefits received. This standard is met if the cost is incurred specifically for the award, can be distributed in proportions that may be approximated using reasonable methods, and is necessary to the overall operation of the District and is assignable in part to the federal award in accordance with the principles in 2 CFR 200 Subpart E – Cost Principles. Condition – During our audit, we noted that the District did not have adequate internal controls in place to ensure all salary costs charged to the federal special education cluster programs met the standard for an allowable or allocable cost as defined by the U.S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) allowable costs standards, which resulted in a reportable instance of noncompliance. Questioned Costs – $250,383. Context – For four of four employees tested, the District had charged portions of the individuals’ salaries to the program, but did not have sufficient time and effort documentation to support the amount of cost allocated to the programs. This was not a statistically valid sample. Repeat Finding – This is a current year finding. Cause – This was an oversight by district personnel. Effect – This is a potential violation of the award agreement. Recommendation – We recommend that the District review its internal control procedures relating to allowable costs for its federal special education cluster programs. View of Responsible Official and Planned Corrective Actions – The District agrees with the finding. The District will review and update its policies and procedures relating to allowable costs for its federal programs to ensure compliance with the Uniform Guidance in the future. The District has separately issued a Corrective Action Plan related to this finding.