MILFORD SDLocal Government

Criteria or specific requirement: Payroll expenditures charged to federal programs should be supported by periodic certifications, employee activity reports, or equivalent documentation to support actual work performed and costs charged to the program. Condition: During our testing of internal controls over compliance with the federal program, we noted that wage costs for salaried employees are charged to the federal program based on budgetary allocations developed at the time of the grant application or determination of the employees wage during the hiring process. Costs are based on actual payroll costs incurred, however, periodic certifications or other forms of employee activity reports are not obtained to verify that the allocation of costs reflect a reasonable representation of the employee?s activities. Questioned costs: None. Context: Of the nine employees tested, four of the individuals were salaried employees. Each salaried employee was allocated to a singular federal program in accordance with budgetary authorization and corresponding with the employee?s job description. Effect: Failure to adequately document personnel activity in accordance with the requirements of the code of federal regulations increases the risk the District will request reimbursement for expenditures which were not related to employee time spent on the federal award. Cause: Salaried employees working on the Special Education Cluster programs are hired to work solely on those programs. Additionally, they are budgeted to be funded solely from those same programs. As a result, the District has not implemented additional certifications or employee activity reporting requirements for those employees. Recommendation: We recommend the District implement a semi-annual certification process, or similar employee activity reporting system, to be completed subsequent to the program activities being performed, in order to verify the costs charged to the grants are supported by the actual work performed.

Criteria or specific requirement: Annually, each student applying for free or reduced meal prices must complete and submit an application to the District by October 1st. Additionally, on a monthly basis the State produces a listing of the children enrolled in the District who receive federal assistance and qualify for free meals (direct certification).Condition: During our testing of compliance with the federal program, we noted the District utilized the prior year status for direct certification children. New applications were not obtained for those individuals no longer on the direct certification listing as of October 1st of the current fiscal year. As a result, those individuals no longer on the direct certification listing and who had not filled out a new application were provided free meals for the fiscal year.Questioned costs: $4,644 based on five individual?s status inappropriately classified as free. For those five individuals it was assumed both a breakfast and lunch meal were served for a period of 180 days.Context: Of the children who had an application on file with the District as of October 1, 2018 we selected 40 individuals which included a mixture of free (23), reduced (9) and denied (8) statuses. Eligibility of 21 of the 23 free status individuals was determined based on direct certification. In cross referencing the direct certifications to the listing provided by the State of New Hampshire, we noted 5 individuals were not on the listing for the current year and for whom the District did not have an application on file. These 5 individuals? status were determined during the prior fiscal year and were not updated within the system as of October 1, 2018. Finally, the 2 remaining free, 9 reduced and 8 denied statuses were appropriately determined based on information provided on the application.Effect: Failure to update the eligibility status of individuals based on completed applications or status received directly from the State of New Hampshire increases the risk students who do not qualify for the free or reduced benefits will continue to receive benefits throughout the year. Additionally, as a result of failing to remove the free or reduced status, the District increases the risk of improper calculation of the paid lunch equity used to determine meal prices for the following fiscal year.Cause: The District?s food service director was new to the position for fiscal year 2019 and was not familiar with the process of carrying over eligibility status for direct certifications from the prior fiscal year.Recommendation: We recommend the District?s food service director examine the listing of individuals included as direct certifications from the prior fiscal year against the current year listing obtained from the State to verify and make any changes in student status. Additionally, it may be necessary for the food service director to work with the District to identify students who were on the prior year listing but have not filed an application as of the start of the school year. In doing so, the District will ensure an application is on file for the student in the event the individual is removed from the direct certification listing.