2022-001 The District?s internal controls were inadequate for ensuring compliance with requirements for time-and-effort documentation. Assistance Listing Number and Title: 84.425, COVID-19 ? Education Stabilization Fund 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: COVID-19, 84.425D-0120580 COVID-19, 84.425U-0137095 COVID-19, 84.425U-0138060 COVID-19, 84.425W-0459589 COVID-19, 84.425U-0712229 Known Questioned Cost Amount: $0 Description of Condition The objectives of the Education Stabilization Fund (ESF) are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $788,390 in federal funds through its ESF awards. This included $705,878 in the Elementary and Secondary School Emergency Relief (ESSER I and II) Fund subprogram (84.425D), $82,453 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $59 in the American Rescue Plan Elementary and Secondary School Emergency Relief ? Homeless Children and Youth (ARP ESSER ? HCY I and II) subprogram (84.425W). Of these awards, the District spent $274,492 on salaries and benefits. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding award requirements and monitoring the effectiveness of established 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. Time-and-effort documentation must also be signed and dated after the work is completed. Description of Condition The District?s internal controls were ineffective for ensuring it supported all salaries and benefits charged to the ESF program with appropriate time-and-effort documentation, as the awarding agency requires. The District could not provide time-and-effort documentation for two employees who worked part-time in the ESF program. The employees were paid with funds through both ESF and another federal program. We consider this internal control deficiency to be a significant deficiency. The issue was not reported as a finding in the prior audit. Cause of Condition Due to an unusual amount of turnover, District personnel usually responsible for monitoring time-and-effort compliance had additional roles and responsibilities added to their workload. After roles changed, the District did not properly reassign responsibility for monitoring time-and-effort compliance and could not demonstrate proper procedures were followed. Further, personnel who were responsible for monitoring time-and-effort compliance during the 2021?22 school year are no longer with the District, and current staff could not locate any supporting documentation that may have existed. Effect of Condition The District did not obtain time-and-effort documentation for two employees whose payroll and benefits costs totaling $41,209 were charged to the ESF program. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the granting agency?s requirements to support costs charged to federal programs. Further, the District cannot assure the federal grantor 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 these employees worked on the programs; 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. District?s Response Pioneer School District agrees with the State Auditor?s Office reporting of a finding based on the referenced laws and regulations. While the District does agree with the finding, we would also like to highlight the circumstances that ultimately led to it. Over the course of the year, the District had turnover in six of nine administrative positions in addition to having a new Director of Finance, as of September 1, 2021. The amount of change within the District?s administrative team created many difficulties in determining all the responsibilities of departed employees and who would take on that responsibility. Pioneer School District is committed to the safeguarding of public resources through the implementation and maintenance of strong internal controls. Working with the new administrative team, we have addressed the issues highlighted in this finding and other recommendations made by the State Auditor?s Office. We are working and will continue working on creating a strong set of internal controls that will limit the amount of risk associated with District activities. 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 Addendum to Bulletin 048-17, Guidelines for Charging Employee Compensation to Federal Grants.