Finding Text
Material Weakness - Internal Control over Activities Allowed/Allowable Costs
Program: COVID-19: Education Stabilization Fund
Assistance Listing Number: 84.425
Pass-Through Agency: Wisconsin Department of Public Instruction
Criteria: A system of internal controls should be in place and operating effectively to achieve a higher reliability that errors or irregularities in expense recording will be identified by staff. This system should include approval of all inputs.
Condition: Approval is not consistently documented on invoices or substitute teachers and summer employee timecards/pay reports. One person handles the majority of supporting documents, with no outside review.
Cause: The District did not ensure that the proper reviews and approvals were in place prior to payment.
Context: Of the 40 expenditures tested for internal control purposes, 12 lacked adequate documentation of review and approval. There was no process to document approval of substitute teachers and summer recreation employee's time worked. HSA amounts lack documentation of the approved amounts. Purchase orders are generally approved with account coding, but this was not done for purchases that fell outside the usual PO process. The sample was not statistically valid.
Effect: Because of the lack of internal controls, it is less likely that errors or irregularities in the expenditures would be discovered internally. Unallowable costs could be charged to the grant.
Questioned Costs: None noted.
Recommendation: An appropriate, knowledgeable employee should review all invoices and timecards prior to payment, including substitute and summer employees, and approval should be documented. We also recommend that employer HSA contribution amounts should be approved annually by the School Board, and documentation of approved rates should be retained.
Views of Responsible Officials: Management agrees with finding 2023-004 and will make efforts to implement recommended procedures.