Finding Text
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 84.425U-0138078 COVID-19 84.425U-0137118 Known Questioned Cost Amount: $0 Background 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 $281,272 of its ESF awards, all of which was from the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER III) subprogram (84.425U). 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. 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 eight employees who worked part-time in the ESF program. The employees were food service workers paid with funds through both ESF and another federal program. We consider this deficiency in internal controls to be material weaknesses, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition District officials did not know about the requirement to obtain time-and-effort documentation for staff paid with funds through ESF and another federal program. Effect of Condition The District did not obtain time-and-effort documentation for eight employees whose payroll and benefits costs totaling $113,505 were charged to the ESF 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 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 All federal grants will be reviewed by the Grant Manager at the start of the grant to determine if Time and Effort reporting is required. The Grant Manager will coordinate with Human Resources and the manager of the federal grant to ensure proper forms and instructions are provided. The Grant Manager will monitor Time and Effort form submission throughout the grant period. 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