Finding Text
2022-001 The District did not have adequate internal controls for ensuring compliance with federal 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: 0203911 Known Questioned Cost Amount: $0 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. During fiscal year 2022, the District spent $916,410 in Title I program funds, of which $855,904 was for gross pay and benefits. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established program controls. The District is responsible for ensuring it supports all payroll costs charged to the program with adequate time-and-effort documentation, as federal regulations and the awarding agency require. 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. Description of Condition The District?s internal controls were ineffective for ensuring it supported all salaries and benefits charged to the Title I program with appropriate time-and-effort documentation. The District could not provide time-and-effort documentation for six employees who worked in the Title I program. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District experienced turnover in key positions responsible for monitoring time-and-effort compliance. The District did not ensure new staff received the necessary training to understand their roles and responsibilities in this process. In addition, adjustments made to staff allocations and assignments were not communicated to the Title I department so it could ensure time-and-effort compliance. Effect of Condition The District did not obtain time-and-effort documentation for six employees whose payroll costs totaling $450,911 were charged to the Title I program. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the granting agency?s documentation requirements to support costs charged to federal programs. Further, the District cannot assure federal grantors that payroll costs charged to the program were accurate and valid. During the audit, the District supported these payroll costs by providing alternative documentation to show the employees worked in the program; therefore, we are not questioning these costs. Recommendation We recommend the District design and follow internal controls to ensure employees complete time-and-effort documentation to support payroll costs charged to federal programs. We also recommend the District provide staff with necessary training to understand federal program requirements. District?s Response The District has implemented controls to ensure Time and Effort documentation is maintained for all federal programs. As alternative documentation was provided, the District has demonstrated payroll costs charged to the Title I program were accurate and valid. New program staff will be trained regarding the Time and Effort requirements. Auditor?s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District?s corrective action 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. Office of Superintendent of Public Instruction (OSPI) Addendum to Bulletin 048-17, Guidelines for Charging Employee Compensation to Federal Grants.