Finding Text
Finding 2023-001
Material Weakness in Internal Control Over Compliance and Material Non-Compliance
Federal Agency: U. S. Department of Education
Pass-Through Entity: Mississippi Department of Education
Federal Program: Special Education Cluster
Special Education Grants to States 84.027
COVID 19 - Special Education Grants to States 84.027X
Special Education Grants to States 84.173
COVID 19 - Special Education Grants to States 84.173X
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding from Prior Audit? No
Condition: Controls were not adhered to within the Office of Special Services to endure that time and effort documentation were maintained in accordance with 2 CFR section 200.430 and Appendix B of 2 CFR Part 225 – Selected Items of Cost. Time and effort documentation for Special Education Cluster employees who worked on one cost objective submitted annual certifications instead of the required semi-annual certifications. The following deficiencies were noted regarding personnel activity reports (PAR forms): (1) PAR forms were not reviewed for mathematical accuracy resulting in incorrect percentages of effort by cost objective; (2) comparisons of actual costs to budgeted distributions based on the monthly activity reports were not performed at least quarterly. The lack of review and comparison of actual cost to budget did not result in excess cost to the federal award. (3) the district did not review, and approved PAR forms within the timeline established by the district on a consistent basis. Date and signature documentation on at least one PAR form for each employee tested was signed and dated after the fifth of the following month.
Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.430 – Uniform Administrative Requirements, Cost Principles, and Audit Requirement for Federal Awards (Uniform Guidance) requires charges to federal award for salaries and wages to be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal controls which provide reasonable assurance that charges are accurate, allowable and properly allocated, (2) reasonably reflect total activity for which the employee is compensated, (3) encompass both federally assisted and all other activities compensated by the entity, (4) support the distribution of the employee’s wages among specific cost objectives if the employee works on more than one federal award, (5) be reconciled with payroll budget estimates with necessary adjustments made to accounting records to ensure that excess costs are not charged to federal programs. In addition, Appendix B of 2 CFR Part 225 – Selected Items of Cost requires:
(1) Where employees are expected to work solely on a single Federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications will be prepared at least semi-annually and will be signed by the employee or supervisory official having firsthand knowledge of the work performed by the employee.
(2) Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports. These reports must meet the following standards:
(a) They must reflect an after-the-fact distribution of the actual activity of each employee,
(b) They must account for the total activity for which each employee is compensated,
(c) They must be prepared at least monthly and must coincide with one or more pay periods, and
(d) They must be signed by the employee.
(e) Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to Federal awards but may be used for interim accounting purposes, provided that:
(i) The governmental unit's system for establishing the estimates produces reasonable approximations of the activity actually performed;
(ii) At least quarterly, comparisons of actual costs to budgeted distributions based on the monthly activity reports are made. Costs charged to Federal awards to reflect adjustments made as a result of the activity actually performed may be recorded annually if the quarterly comparisons show the differences between budgeted and actual costs are less than ten percent; and
(iii) The budget estimates or other distribution percentages are revised at least quarterly, if necessary, to reflect changed circumstances.
Cause: A lack of oversight by program personnel resulted in documentation for time and effort reporting to not conform to requirements of set forth in 2 CFR 200.430 and Appendix B of 2 CFR Part 225.
Effect: Failure to timely and properly prepare and review time and effort reporting could allow for improper charges to be made to the federal award which could result in disallowed charges to the program.
Context: Fifteen (15) of fifteen (15) semi-annual certifications examined were prepared for the entire school year instead of on a semi-annual basis. Two personnel activity reports for one employee were not signed by the immediate supervisor. At one or more PAR forms for eight (8) of the eight employees monthly PAR reports tested were not signed and approved timely as defined by the district procedures.
Repeat Finding: This is not a repeat finding.
Auditor’s Recommendation: The school district should provide training to all employees working on Special Education grants to educate them on the requirements for documenting personnel time and effort both for semi-annual certifications and personnel activity reports.
View of Responsible Officials and Planned Corrective Actions: See Auditee’s Corrective Action Plan