Finding 613262 (2022-002)

Material Weakness
Requirement
B
Questioned Costs
-
Year
2022
Accepted
2023-07-16

AI Summary

  • Core Issue: Internal controls over payroll expenditures for the Education Stabilization Fund were ineffective, leading to overpayments.
  • Impacted Requirements: Compliance with 2 CFR § 200.430 and 2 CFR § 200.303 regarding allowable costs and internal controls.
  • Recommended Follow-Up: Implement a verification process to ensure wages charged to federal programs match approved pay rates to avoid future compliance issues.

Finding Text

2 CFR ? 3474 gives regulatory effect to the Department of Education for 2 CFR ? 200.430, which provides, in part, compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non- Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR ? 200.303 requires a non-Federal entity receiving federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. During our testing of the Education Stabilization Fund grant program, we noted the internal controls over allowable costs and activities of payroll expenditures charged to the grant were not designed effectively to detect errors in rates paid. Our test detected that two out of eight employee paychecks charged to the grant were based on rates that did not agree with the approved pay rates. These two employees were overpaid by a total of $399 (see Finding 2022-003). The Educational Service Center should implement a control process that verifies wages charged to federal programs agree to approved pay rates. This will help to ensure the Educational Service Center is in compliance with Federal grant requirements for allowable costs. Failure to do so could result in future questioned costs and loss of federal grant funding.

Categories

Allowable Costs / Cost Principles Period of Performance Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 36819 2022-002
    Material Weakness
  • 36820 2022-002
    Material Weakness
  • 613261 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.027 Special Education_grants to States $801,511
84.425 Covid-19 Education Stabilization Fund $242,879
93.575 Covid-19 Child Care and Development Block Grant $114,441
84.173 Special Education_preschool Grants $33,712
84.367 Supporting Effective Instruction State Grants $7,353