FAC Explorer

Finding 63264 (2022-001)

Material Weakness Repeat Finding
Requirement
ABEILN
Questioned Costs
-
Year
2022
Accepted
2023-03-22
Audit: 69832
Organization: North Fayette Valley Community School District (IA)
Auditor: Hacker Nelson & CO PC

AI Summary

  • Core Issue: The District lacks adequate segregation of duties, increasing risks for cash handling and financial statement accuracy.
  • Impacted Requirements: Internal controls are compromised as incompatible activities are not separated, violating best practices for financial management.
  • Recommended Follow-up: Management should assess current procedures to enhance internal controls, acknowledging the limitations of staff size.

Finding Text

Finding 2022-001 Overlapping Duties Condition: The District?s offices are not large enough to permit an adequate segregation of duties for effective internal controls. Management has not separated incompatible activities of personnel, thereby creating risks related to the safeguarding of cash and the accuracy of the financial statements. Criteria: Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the District?s financial statements. Cause: The concentration of closely related duties and responsibilities such as the recording and processing of cash receipts, preparing grant expenditure reports, preparing financial information for posting and analyzing financial information by a small staff makes it impossible to establish an adequate system of automatic internal checks on the accuracy and reliability of the accounting records. Effect: This deficiency results in a reasonable possibility that the District would not be able to detect misstatements that would be material in relation to the financial statements and/or federal award programs in a timely period by employees in the normal course of performing their assigned functions. Recommendation: The District should review the operating procedures of the District offices to obtain the maximum internal control possible under the circumstances utilizing currently available staff. While we do recognize that the District is not large enough to permit a segregation of duties for effective internal controls, we believe it is important the Board be aware that this condition does exist. Views of Responsible Officials and Planned Corrective Actions: Management is cognizant of this limitation and will implement additional procedures where possible.

Corrective Action Plan

CORRECTIVE ACTION PLAN February 21, 2023 To: U.S. Department of Agriculture and U.S. Department of Education North Fayette Valley Community School District respectfully submits the following corrective action plan for the year ended June 30, 2022. Name and address of independent public accounting firm: Hacker, Nelson & Co., CPAs 123 W. Water Street Decorah, IA 52101 Audit period: Year ended June 30, 2022. The finding from the June 30, 2022 schedule of findings and questioned costs is discussed below. The finding is numbered consistently with the numbers assigned in the schedule. FINDING - FEDERAL AWARDS PROGRAM AUDIT U.S. Department of Agriculture: 2022: Child Nutrition Cluster: Federal Assistance Listing Number 10.553 School Breakfast Program Federal Assistance Listing Number 10.555 National School Lunch Program Emergency Operation Cost during COVID-19 Page 2 FINDING - FEDERAL AWARDS PROGRAM AUDIT (Continued) U.S. Department of Education: 2022: Education Stabilization Fund (ESF): Federal Assistance Listing Number 84.425B Discretionary Grants: Rethink K-12 Education Models (ARP) Federal Assistance Listing Number 84.425C COVID-19 Governor?s Emergency Education Relief Fund (GEER II) Federal Assistance Listing Number 84.425D COVID-19 Elementary and Secondary School Emergency Relief Fund (ESSER II) Federal Assistance Listing Number 84.425U American Rescue Plan - Elementary and Secondary School Emergency Relief (ARP ESSER III) Material Weakness: See Finding 2022-001 Recommendation: The District should review the operating procedures of the District offices to obtain the maximum internal control possible under the circumstances utilizing currently available staff. While we do recognize that the District is not large enough to permit a segregation of duties for effective internal controls, we believe it is important the Board be aware that this condition does exist. Action taken: Management is cognizant of this limitation and will implement additional procedures where possible. Material Weakness: See Finding 2022-002 Recommendation: The District should ensure bank reconciliations are being prepared and compared to the general ledger balance each month to investigate and resolve any variances in a timely manner. Action taken: In the future, we will perform bank reconciliations and compare to the general ledger each month. If the U.S. Department of Agriculture or U.S. Department of Education has questions regarding this plan, please call Sue Thoms, Business Manager/Treasurer, at 563-422-3851. Sincerely yours, Sue Thoms North Fayette Valley Community School District Business Manager/Treasurer cc: Neil W. Schraeder, CPA

Categories

Internal Control / Segregation of Duties

Other Findings in this Audit

  • 63265 2022-002
    Material Weakness Repeat
  • 63266 2022-001
    Material Weakness Repeat
  • 63267 2022-002
    Material Weakness Repeat
  • 63268 2022-001
    Material Weakness Repeat
  • 63269 2022-002
    Material Weakness Repeat
  • 63270 2022-001
    Material Weakness Repeat
  • 63271 2022-002
    Material Weakness Repeat
  • 63272 2022-001
    Material Weakness Repeat
  • 63273 2022-002
    Material Weakness Repeat
  • 63274 2022-001
    Material Weakness Repeat
  • 63275 2022-002
    Material Weakness Repeat
  • 639706 2022-001
    Material Weakness Repeat
  • 639707 2022-002
    Material Weakness Repeat
  • 639708 2022-001
    Material Weakness Repeat
  • 639709 2022-002
    Material Weakness Repeat
  • 639710 2022-001
    Material Weakness Repeat
  • 639711 2022-002
    Material Weakness Repeat
  • 639712 2022-001
    Material Weakness Repeat
  • 639713 2022-002
    Material Weakness Repeat
  • 639714 2022-001
    Material Weakness Repeat
  • 639715 2022-002
    Material Weakness Repeat
  • 639716 2022-001
    Material Weakness Repeat
  • 639717 2022-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund $916,655
10.555 National School Lunch Program $757,997
84.010 Title I Grants to Local Educational Agencies $189,749
10.553 School Breakfast Program $139,557
84.287 Twenty-First Century Community Learning Centers $80,399
84.027 Special Education_grants to States $56,808
84.367 Improving Teacher Quality State Grants $41,882
84.048 Career and Technical Education -- Basic Grants to States $11,712
84.424 Student Support and Academic Enrichment Program $11,104
10.649 Pandemic Ebt Administrative Costs $614