Finding Text
2023-004 Segregation of Duties - ESSER
Federal Agency: US Department of Education
Federal Program Name: Elementary and Secondary School Emergency Relief
Assistance Listing Number: 84.425D, 84.425U
Federal Award Identification Number and Year: S425D210044, S425U210044
Pass-Through Agency: Wisconsin Department of Public Instruction
Pass-Through Number(s): 2022-710203-DPI-ESSERFII-163, 2022-710203-DPI-ESSERFIII-165
Award Period: 3/13/2020-9/30/2024
Type of Finding: Significant Deficiency in Internal Control Over Compliance
Criteria or Specific Requirement: Segregation of duties is an internal control intended to prevent or detect the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction.
Condition: The Finance Director is the only District employee with the authority to approve a purchase to use ESSER funds. The Finance Director prepared the annual report and there was no review of the report by someone other than the preparer prior to submission to Wisconsin Department of Public instruction. Accordingly, this does not allow for a proper segregation of duties for internal control purposes.
Context: When identifying internal controls over compliance related to reporting (annual report) and allowable costs and allowable activities (general disbursements), it was noted that the Finance director position handled all the responsibilities of those functions related to ESSER and there were no formal, documented internal controls over compliance in place to review that procedures were performed as required and no review of the work completed by someone other than the preparer.
Questioned Costs: None
Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District’s operations.
Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. District could incorrectly report amounts and other data on the annual report.
Repeat Finding: No.
Recommendation: We recommend the District review its processes related to general disbursements for grants and implement a control where someone other than the Finance Director is reviewing disbursements coded to grant project codes to help ensure compliance with grant requirements. We also recommend that the District implement a formal review process over the reporting requirement relating to ESSER annual reports.
Views of Responsible Officials: There is no disagreement with the audit finding.