Finding 6465 (2023-004)

Material Weakness Repeat Finding
Requirement
FL
Questioned Costs
$1
Year
2023
Accepted
2023-12-26
Audit: 8413

AI Summary

  • Core Issue: The District lacks effective internal controls over federal awards, leading to noncompliance with federal regulations.
  • Impacted Requirements: Failure to obtain prior approval for capital expenditures and inadequate documentation for wage requirements.
  • Recommended Follow-Up: Appoint a knowledgeable individual or provide training on federal compliance to oversee federal programs.

Finding Text

Finding No. 2023-004 – Internal Controls over Compliance of Federal Awards (Partial Repeat 2022-005 and 2021-007) Federal Program Name: Education Stabilization Funds (Elementary and Secondary School Emergency Relief Fund Project Number: N/A CFDA Number: 84.425D and 84.425U Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 – Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 2, subpart E – the District must receive prior approval from the SEA (ISBE) for capital expenditures for equipment acquisition or improvements to land, buildings, or equipment. 2 CFR Part 4, Wage Rate Requirements – Recipients of ESF funds for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis-Bacon prevailing wage requirements. Condition: 1) During testing of compliance over disbursements, we noted the following: a. Eight (8) transactions totaling $474,924 appeared to be for capital purchases that did not have prior approval by the SEA b. Six (6) transactions totaling $52,117 were incurred where the District appeared to be subject to Davis-Bacon prevailing wage requirements but no documentation was retained. Additionally, a formal policy for complying with Davis-Bacon requirements is not in place for individual expenditures less than $25,000. 2) During testing of compliance over reporting, we noted the following: a. Expenditure reports were completed based on budgeted amounts rather than actual expenditures. In total, expenditure reports exceeded amounts reported in the District’s general ledger by $726,653. Questioned Costs: 1) N/A 2) $726,653 Context: 1) a. 8 exceptions of 60 transactions tested b. 6 exceptions of 60 transactions tested 2) Expenditure reports for ESSER programs totaled $3,411,524 for expenditures claimed for reimbursement while the District’s general ledger indicated $2,684,871 of ESSER-related expenditures. Effect: 1) The lack of proper internal controls of disbursements could result in the District paying for unallowable expenditures from the grant funds. 2) Noncompliance with grant agreement. Cause: Lack of proper oversight by District personnel. Recommendation: We recommend that the District appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District’s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Management’s Response: The District is working to implement that the auditor’s recommendation

Corrective Action Plan

2023-004 Internal Controls over Compliance of Federal Awards (Education Stabilization Fund 84.425) Condition: 1) During testing of compliance over disbursements, we noted the following: a. Eight (8) transactions totaling $474,924 appeared to be for capital purchases that did not have prior approval by the SEA b. Six (6) transactions totaling $52,117 were incurred where the District appeared to be subject to Davis-Bacon prevailing wage requirements but no documentation was retained. Additionally, a formal policy for complying with Davis-Bacon requirements is not in place for individual expenditures less than $25,000. 2) During testing of compliance over reporting, we noted the following: a. Expenditure reports were completed based on budgeted amounts rather than actual expenditures. In total, expenditure reports exceeded amounts reported in the District’s general ledger by $726,653. Plan: The District will appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District’s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Anticipated Date of Completion: Immediately upon learning of issue. Name of Contact Person: Lorraine Bailey, Superintendent

Categories

Questioned Costs Internal Control / Segregation of Duties Procurement, Suspension & Debarment Allowable Costs / Cost Principles Cash Management Reporting Equipment & Real Property Management

Other Findings in this Audit

  • 6466 2023-004
    Material Weakness Repeat
  • 6467 2023-004
    Material Weakness Repeat
  • 6468 2023-004
    Material Weakness Repeat
  • 6469 2023-005
    Material Weakness
  • 582907 2023-004
    Material Weakness Repeat
  • 582908 2023-004
    Material Weakness Repeat
  • 582909 2023-004
    Material Weakness Repeat
  • 582910 2023-004
    Material Weakness Repeat
  • 582911 2023-005
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.010 Title I Grants to Local Educational Agencies $563,056
84.287 Twenty-First Century Community Learning Centers $532,386
84.027 Special Education_grants to States $361,173
84.425 Education Stabilization Fund $350,000
21.027 Coronavirus State and Local Fiscal Recovery Funds $283,691
93.994 Maternal and Child Health Services Block Grant to the States $117,193
10.553 School Breakfast Program $95,174
93.778 Medical Assistance Program $80,716
10.582 Fresh Fruit and Vegetable Program $53,991
84.173 Special Education_preschool Grants $26,321
84.358 Rural Education $23,201
10.555 National School Lunch Program $15,639