Finding Text
U.S. Department of Education: 2022-005: Internal Control over Compliance Material Weakness: As discussed in finding 2022-002, the District continues to have a lack of controls and timely processes over classification of allowable costs and reconciling the general ledger coding with the identified allowable costs to the required Federal expenditure reporting. Without proper control over coding and classification, the control over allowable costs and the reporting of allowable costs could be compromised. The District must improve procedures to ensure monthly reconciliation of general ledger coding with identified allowable costs. The lack of timely reconciliations with the District?s bank statement accounts and payroll related liability accounts provides additional concern with the District?s overall internal control over compliance. Refer to findings 2022-001, 2022-002 and 2022-003 for the views of responsible officials and planned corrective actions. 2022-001: Bank Statement Cash Reconciliations Condition: The District?s reconciliation of the monthly bank statement cash balances to the ending general ledger cash balances were not being performed in a timely fashion and contained unreconciled differences and unrecorded transactions. Criteria: Proper internal controls require monthly reconciliation of bank statement cash balances to general ledger cash balances in a timely fashion. Unreconciled differences should be resolved each month. Effect: Because of the failure to properly perform monthly reconciliations, account balances were incorrect and required a significant number of correcting adjustments. The potential for misstatement is significantly increased if reconciliations are not performed timely. Recommendation: The District must take better steps to ensure all cash balances are reconciled monthly. All general ledger cash balances must be reconciled to bank statement balances and unreconciled differences must be investigated and corrected in the month of reconciliation. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding and will continue to provide the necessary training for all individuals involved in this area. Where possible, the District will add mitigating controls and steps. The District has made changes to personnel directly involved in this area and the Superintendent is currently providing direct oversight and assistance in this area. Additional oversight procedures will continue to be added as personnel are trained which will significantly improve the control over bank statement reconciliations. 2022-002: Federal Grant Classification Condition: Federal expenditure reports for each respective Federal grant were again not reconciled to the District?s general ledger throughout the year and the classification of expenditures (fund, function, object, project and source) originally did not agree to that as reported in the final expenditure reports. Corrections were necessary to ensure the final expenditure reports were reconciled to the general ledger. These steps should be occurring throughout the year. Criteria: The District must be able to specifically identify and provide support for every Federal expenditure that is reimbursed. Proper classification in the District?s general ledger should agree with reporting in the final expenditure reports. Effect: Because of the failure to properly classify revenues and expenses throughout the year, adjustments were required. Without proper oversight and review, there is potential for misstatements of federal program activity in final expenditure reports. Recommendation: The District must be able to specifically identify and provide support for every Federal program expenditure. Review procedures to verify proper classification and allowability is necessary. Procedures to monitor and reconcile general ledger classification to Federal reporting is also necessary. These procedures should occur during the year rather than after the end of the fiscal year. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding and will continue to provide the necessary training for all individuals involved in this area. Where possible, the District will add mitigating controls and steps, and provide better oversight. The District Superintendent is currently providing direct oversight and assistance in this area. 2022-003: Payroll Related Liability Reconciliations and Payments Condition: The District?s reconciliation of the monthly payroll related liability accounts were not being performed in a timely fashion. Additionally, the District was not remitting payment for required payroll tax payments and employee deductions in a timely fashion. Criteria: Proper internal controls require monthly reconciliation of all payroll related liability balances and any other general ledger balance in a timely fashion. Payments of payroll taxes and other payroll related deductions should be made timely and in accordance with requirements. Effect: Because of the failure to properly perform monthly reconciliations, account balances were incorrect and required a significant number of correcting adjustments. The potential for misstatement is significantly increased if reconciliations are not performed timely. Payroll taxes and other payroll related deductions were not paid timely. Recommendation: The District must take better steps to ensure all payroll related liability balances are reconciled monthly and all payroll taxes and other payroll related deductions being paid timely and in accordance with requirements. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding and will continue to provide the necessary training for all individuals involved in this area. Where possible, the District will add mitigating controls and steps, and provide better oversight. The District Superintendent is currently providing direct oversight and assistance in this area.