Selah School District No. 119 September 1, 2021 through August 31, 2022 2022-001 The District?s internal controls were inadequate for ensuring compliance with federal requirements for time-and-effort documentation. Assistance Listing Number and Title: 84.027, Special Education Grants to States 84.027, COVID-19 Special Education Grants to States 84.173, Special Education Preschool Grants 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: 0307535, 0312137, 0371121, 0366905, 0388062, 0270585, 0203992 Known Questioned Cost Amount: $0 Background Special Education The objective of the Special Education program is to ensure all children with disabilities receive special education and related services to meet their needs. The program has specifically designed instruction that addresses the unique needs of an eligible student. During fiscal year 2022, the District spent a total of $867,917 in federal funds through the Special Education program. Of this amount, the District spent $839,011 on salaries and benefits. Title I 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. In fiscal year 2022, the District spent $842,982 in federal funds through the Title I program. Of this amount, the District spent $791,047 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 Our audit found the District?s internal controls were ineffective for ensuring it supported all salaries and benefits charged to the Special Education and Title I programs with appropriate time-and-effort documentation, as federal regulations require. Special Education The District could not provide time-and-effort documentation for six employees who worked solely in the program. The timesheets provided did not indicate that the employees worked in the Special Education program. Additionally, the District incorrectly charged the Special Education program for payroll costs of one employee who substituted for a paraeducator in another program. Title I The District could not provide time-and-effort documentation for seven employees who worked solely in the Title I program at the District Office and were not dedicated to a specific school building. We consider these deficiencies to be material weaknesses that led to material noncompliance. These issues were not reported as findings in the prior audit. Cause of Condition The District has multiple time-and-effort templates for the Special Education program. Some templates only include the building name and do not identify the program the employee worked on. Staff responsible for collecting time-and-effort documentation for the Special Education program did not ensure employees used the correct timesheet that included the program name they worked on each month. In addition, the District did not require Title I employees to complete semiannual certifications when they were not dedicated to a specific school building. District officials thought the certificated payroll authorization form, which employees completed at the beginning of the school year, would suffice as adequate documentation. Effect of Condition Special Education Using a nonstatistical sample, we found six out of 23 employees (26 percent) whose payroll costs totaling $106,400 did not have time-and-effort documentation to support the hours they worked on the Special Education program. We also found the District incorrectly charged one employee?s payroll costs of $118 to the program, which are unallowable charges. Title I We found seven employees whose payroll costs totaling $556,936 were charged to the Title I program. The employees did not complete time-and-effort documentation, which is required to support both their time worked and payroll costs charged to the program. Without adequate time-and-effort documentation, the District cannot assure its federal grantor that payroll costs charged to the program were accurate and valid. The District provided alternative documentation to show that employees worked in the programs and the costs charged to the grants were for allowable activities, except for the one employee?s unsupported payroll costs of $118 charged to the Special Education program. Therefore, we are not questioning these costs. Recommendation We recommend the District implement internal controls to ensure employees complete required time-and-effort documentation to support payroll costs charged to the programs in compliance with federal requirements. District?s Response The District has maintained strong internal controls for time and effort compliance for several years. Time and effort applicability has been determined in August of every year prior to the new year starting. Semi-annual certifications have been routinely obtained for each building (all schoolwide schools) for all certificated staff. The District has also maintained a consistent approach for time and effort for classified staff using timesheets as the time and effort record. When a classified staff member is working under multiple cost objectives, the split of time is documented on the timesheet using program codes. The District has not included the federal program name or number on the timesheet if the staff member is fully funded by one federal program. The District?s position is that if a para-educator is assigned to a special education classroom working with special needs students for a full day, the program name or number would not be necessary on the time and effort record. The assignment is clearly in a special education classroom. This process has been used for several years without audit exception. The District level certificated staff fully funded by Title I were overlooked this past year for semi annual certifications as they were added at the district level that year. The focus has always been on school level funded staff as district level staffing did not exist within the Title I program. Since that time, most of these positions have been eliminated, but the District has already implemented semi-annual certifications for the existing staff member at the district level who is fully funded by the Title I program. The District will also ensure moving forward that all classified timesheets include a program number or name for employees charged fully to one federal program. Staff working under multiple cost objectives already have a timesheet that is in compliance of the time and effort requirements. These documents will continue to serve as the time and effort record for classified staff working in one or more federal programs. Auditor?s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue 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