Finding Text
U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425D PASS-THROUGH NUMBER 3505 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 2022-002. Allowable Cost/Cost Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR section 200.430 established principles for determining the allowable costs incurred by the District under Federal awards. Such costs are to conform to the established written policy of the non-federal entity consistently applied to both federal and non-Federal activities. Condition: In our sample of payroll expenditures, we identified undocumented compensation of $7,685 and improperly awarded incentive pay of $4,700 paid from Federal funds without proper documentation or requirements. Cause: Lack of internal controls over program expenditures. Effect or potential effect: Unallowable costs of $12,385 were paid from COVID-19 Elementary and Secondary School Emergency Relief funds for additional hours and incentive pay. Questioned costs: The amount of questioned costs was $12,385. Context: An examination of COVID-19 Elementary and Secondary School Emergency Relief Fund payroll expenditures for 25 employees totaling $121,905 from a population of 609 employees totaling $3,869,314. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District acknowledges the finding and would take this opportunity to explain the circumstances surrounding this material weakness. While not an excuse, it in part explains the conditions under which these instances of undocumented compensation occurred. The District has been impacted by multiple staff changes in the Business Office. The District has employed and/or contracted for payroll services with four (4) persons and for the role of Business Manager with three (3) persons just during this calendar year alone. The District has taken steps to stabilize the workforce in the Business Office. In addition to addressing the human capital issues, the District will provide additional monitoring support to ensure the implementation of the existing internal controls over program expenditures. The District has already taken steps to recoup compensation that was improperly awarded and paid. As recommended, the District will contact Arkansas Division of Elementary and Secondary (DESE) for guidance regarding this matter.