Finding Number 2022-008
Prior Year Finding Number N/A
Compliance Requirement: Allowable Costs/Costs Principles
Program:
U.S. Department of Education
Title I Grants to Local Educational Agencies
ALN #: 84.010
Award #: Various
Award Period: Various
COVID-19 – Governor’s Emergency Education Relief (GEER)
ALN #: 84.425C
Award #: Various
Award Period: Various
COVID-19 – Elementary and Secondary School Emergency Relief (ESSR) Fund
ALN #: 84.425D
Award #: Various
Award Period: Various
COVID-19 – American Rescue Plan - Elementary and Secondary School Emergency Relief (ARP ESSR)
ALN #: 84.425U
Award #: 211941
Award Period: 03/24/2021 – 09/30/2023
COVID-19 – American Rescue Plan - Elementary and Secondary School Emergency Relief – Homeless Children and Youth
ALN #: 84.425W
Award #: Various
Award Period: Various
Criteria – In accordance with §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following:
1. Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received.
2. Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance.
3. Records that identify adequately the source and application of funds for federally funded activities.
4. Effective control over, and accountability for, all funds, property, and other assets.
The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Further, CFR Section 200.510 (b) requires the auditee must also prepare a Schedule of Expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR section 200.502, Basis for determining Federal awards expended.
Condition – The amounts recorded in the Schedule of Expenditures of Federal Awards (SEFA) agree to the total amount recorded in the general ledger. The summary level payroll transactions recorded in the general ledger could not be reconciled to the transaction level detail provided from the payroll system. When comparing the two populations, we identified the following differences:
• ALN 84.425 - For ALN 84.425 sub-program D, we noted a variance of $1,828,609. Total payroll expenditures per the payroll system details amounted to $18,437,724 whereas payroll expenditures per SEFA amounted to $16,609,116.
In addition to the above, for ALN 84.425 sub-program U, we noted a variance of $301,432. Total payroll expenditures per the payroll system details amounted to $3,607,738 whereas payroll expenditures per the SEFA amounted to $3,909,170.
• ALN 84.010 - We noted a variance of $752,503. Total payroll expenditures per the payroll system details amounted to $40,549,584 whereas payroll expenditures per the SEFA amounted to $39,797,081.
Questioned Costs – Not Determinable.
Context – This is a condition identified per review of the School System’s population completeness over the compliance requirements for each program. The prevalence of these findings is detailed in the condition section above.
Effect – The SEFA may not be completely and accurately stated. In addition, the lack of established internal controls policies and procedures to ensure the SEFA is completely and accurately stated can lead to noncompliance with federal statutes, regulations, and provisions of grant agreements.
Cause – The School System did not adhere to their internal policies and procedures to ensure the accuracy of the SEFA.
Recommendation – We recommend that the School System develop policies and procedures and enhance their existing reconciliation process to ensure the completeness and accuracy of the SEFA, and that amounts reported on the SEFA are supported by transaction level detail.
Views of Responsible Officials – The School System does not concur with the auditor’s findings and recommendations. The total expenditures for all federal programs recorded in the Schedule of Expenditures for Federal Awards are accurately presented and tie to the general ledger. The payroll sub-ledger is corrected before posting to the general ledger every two weeks.
The resulting differences are most often immaterial but can be traced to corrections made by the Accounting Office after payroll is reviewed by the grants Restricted Funds Supervisor to ensure payroll is not posted to expired grants. The planned corrective actions are presented in the School System’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
BDO Response – We have reviewed management’s response and our finding remains as indicated, since we could not validate the details of the differences.