NAUSET REGIONAL SCHOOL DISTRICTLocal Government

2023-001: Controls for Monitoring Payroll Charged to the Grants Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Compliance and Internal Control Over Compliance – Other Matter Criteria or Specific Requirement: Grantees must provide reasonable assurance that Federal awards are expended only for allowable activities and that the costs of goods and services charged to Federal awards are allowable and in accordance with the applicable cost principles. Condition: Management has established written guidelines and policies outlining the time and effort reporting and documentation requirements that department heads must adhere with to ensure compliance with federal and state time and effort reporting requirements. Such guidelines and policies indicate under what circumstances semi-annual certifications and personnel activity reports (PARS) or time and effort reports are required and when this information must be provided to the school business office. These guidelines and policies were not fully adhered to or followed. Questioned Costs: None reported. Context: Payroll expenditures charged to the programs are required to be supported with documentation substantiating that the employees are eligible to be charged to the grant and that the payroll charged relates to time spent accomplishing grant objectives. This supporting documentation should be standardized and should include all required elements in accordance with Title 2 U.S. Code of Federal Regulations Part 225 Cost Principals for State, Local, and Indian Tribal Governments. The District did not have an adequate system of internal controls in place to provide sufficient documentation to demonstrate compliance with federal and state time and effort reporting requirements in accordance with the provisions of Title 2 U.S. Code of Federal Regulations Part 225 Cost Principals for State, Local, and Indian Tribal Governments. Effect: The District has not complied with the federal and state time and effort reporting requirements. Cause: Lack of procedures in place to ensure compliance with time and effort reporting requirements. Recommendation: Management should establish procedures to ensure compliance with District guidelines and policies regarding time and effort reporting and documentation requirements that department heads must adhere with to ensure compliance with federal and state time and effort reporting requirements. Such procedures should indicate under what circumstances semi-annual certifications and personnel activity reports (PARS) or time and effort reports are required and when this information must be provided to the school business office. Management should also implement proper training to ensure that the program managers fully understand the time and effort reporting requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and will establish procedures to ensure compliance with guidelines and policies outlining the time and effort reporting and documentation requirements that department heads must adhere with to ensure compliance with federal and state time and effort reporting requirements. Management will also implement proper training to ensure that the program managers fully understand the time and effort reporting requirements. Management intends to implement these procedures in fiscal 2024.

Program: U.S. DEPARTMENT OF EDUCATION Passed through the Commonwealth of Massachusetts?Department of Elementary and Secondary Education Special Education Cluster ? SPED Grants to States, IDEA, Part B (CFDA #84.027) Pass-through program number: 240-534231-2022-0660 Criteria: Established internal controls surrounding documentation of federal award compliance requirements should ensure that all charges to Federal awards for salaries and wages are based on records that accurately reflect the work performed. Accordingly, time and effort documentation are required to be maintained which clearly documents ?after-the -fact? determinations of amounts for which individuals have worked on the federal program. These records should ensure that individuals working on federal programs and the appropriate supervisory personnel, attest to the actual time individuals spend on the program. Budgetary allocations of the time should be consistent with grant programs, actual work, and established methodologies throughout the entity. Federal guidelines require these records are to be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and Context: During the current year audit, we noted (2) individuals of the (7) individuals tested of the approximate population of (20) charged to the program for which complete time and effort certifications were not available for review. One of the individuals? certifications for the entire fiscal year were unavailable; the other individual?s certifications for the remaining four months of the year were unavailable. Both of these individuals retired at the end of the fiscal year. Cause: The District has yet to implement formalized grant administration policies and procedures to ensure all requirements of federal programs are formally documented as to applicability of each program?s compliance requirement and formal review and monitoring as to the District?s compliance with each throughout the fiscal year. Effect: Lack of documentation of internal controls policies and procedures that are routinely followed may lead to situations where ?time and effort? certifications, as well as other grant compliance requirements may not be met in a timely manner. Accordingly, potential unallowed costs may be present. Questioned Costs: Total salaries estimated for the months for which time & effort certifications were not on file for the aforementioned individuals was approximately $21,000. Perspective Information: This was a finding reported in fiscal year 2020 (2020-001). The District began to enhance its overall maintenance of certain time & effort certifications subsequently. However, the District has yet to implement more formalized grant administration and compliance policies and procedures as recommended by OMB. Auditor?s Recommendation: The District should establish a formalized grants policy and procedures manual which addresses OMB Uniform guidance and federal compliance requirements. Current internal control policies and procedures should be reviewed to ensure all documentation for ?after-the-fact? time and effort certifications are obtained and maintained on file in a timely manner. View of Responsible Official and Planned Corrective Action: The District will enhance the documentation surrounding aspects of Grant compliance and monitoring as well as adoption and implementation of formalized policies and procedures.

Other Matters: Finding No. 2022-002 Recommend enhancement of formalized documentation surrounding grant compliance and filing in accordance with OMB requirements. Criteria: Implementation of the Uniform Guidance highlighted the importance and requirement for grantees to maintain internal control policies and procedures surrounding the compliance and administration of federal grants, focusing on clearly defining the key components (control environment, risk assessment, control activities, information and communication, monitoring). This should include timely maintenance of documentation for completion of the schedule of expenditures of federal awards (SEFA) and completion of the Single Audit within nine months after year end. Condition: The District has yet to fully formalize documentation of all aspects of internal control surrounding grant compliance and administration as recommended by federal guidelines. Documentation of policies and procedures over grant compliance is currently in draft form and has yet to be fully implemented. Moreover, the District was not timely in the certain documentation and responses for the audit to be completed within the required timeframe. Effect: Lack of documentation of internal controls policies and procedures may lead to situations of noncompliance with federal requirements. In the current year, the District was unable to have the audit completed within the nine-month requirement. Perspective Information: The portion of the finding related to formalized policies and procedures was previously reported in the prior year?s audit report as finding in the prior years (2021-001; 2020-003; 2019-004). The submission deadline finding was new in the current year. Questioned Costs: None. Auditor?s Recommendation: We continue to recommend the District establish comprehensive grants management policies and procedures and further enhance the documentation surrounding aspects of grant compliance. The District should ensure all documentation related to the audit, including preparation of the SEFA, is prepared in a timely manner in order to ensure required deadlines are met. View of Responsible Official and Planned Corrective Action: The District will enhance the documentation surrounding aspects of Grant compliance and formalize the documentation for approval by the School Committee. The District anticipates completion of future audits within the Single Audit deadline.

Other Matters: 2021-001 Recommend enhancement of formalized documentation surrounding grant compliance Criteria: Implementation of the Uniform Guidance highlighted the importance and requirement for grantees to maintain internal control policies and procedures surrounding the compliance and administration of federal grants, focusing on clearly defining the key components (control environment, risk assessment, control activities, information and communication, monitoring). Condition: The District has yet to fully formalize documentation of all aspects of internal control surrounding grant compliance and administration as recommended by federal guidelines. Documentation of policies and procedures over grant compliance is currently in draft form and has yet to be fully implemented. Effect: Lack of documentation of internal controls policies and procedures may lead to situations of noncompliance with federal requirements. Perspective Information: This finding was previously reported in the prior year?s audit report as finding in the prior years (2020-003;2019-004). Questioned Costs: None. Auditor?s Recommendation: We continue to recommend the District establish comprehensive grants management policies and procedures and further enhance the documentation surrounding aspects of grant compliance. View of Responsible Official and Planned Corrective Action: The District will enhance the documentation surrounding aspects of Grant compliance and formalize the documentation for approval by the School Committee.

U.S. DEPARTMENT OF EDUCATION Passed through the Commonwealth of Massachusetts?Department of Elementary and Secondary Education Significant Deficiency 2020-002: Special Education Cluster ? SPED Grants to States, IDEA, Part B (#84.027) Pass-through program number: 0240-291568-202-0660 Criteria: A recipient receiving Federal awards under the SPED IDEA cluster may only use those funds for excess costs of providing special education and related services to children with disabilities. Excess costs are the costs for education of a student with a disability that exceed the average annual per student expenditure that a recipient incurred during the preceding school year. Compliance, with 34CFR, Section 300.16, requires that the District calculate the average per pupil expenditure and the minimum average amounts before funds received under the SPED IDEA cluster are used to pay for excess costs. Condition, Context and Cause: The District did not complete excess cost calculation as required. The District has not implemented formalized policies and procedures surrounding grant compliance to ensure required calculations are performed and maintained as required. This is a repeat finding from the prior year. Effect: Costs associated with the grant may be disallowed. Auditor?s Recommendation: Current established internal control policies and procedures should be reviewed and revised accordingly to ensure that excess cost calculations are calculated and documented with appropriate supporting documentation in a timely manner. We recommend the District work with the pass-through agency as deemed appropriate. View of Responsible Official and Planned Corrective Action: The Student Services Director will ensure compliance at the beginning of each fiscal year. Expected to be completed within the next fiscal year.

U.S. DEPARTMENT OF EDUCATION Passed through the Commonwealth of Massachusetts?Department of Elementary and Secondary Education Significant Deficiency 2020-002: Special Education Cluster ? SPED Grants to States, IDEA, Part B (#84.027) Pass-through program number: 0240-291568-202-0660 Criteria: A recipient receiving Federal awards under the SPED IDEA cluster may only use those funds for excess costs of providing special education and related services to children with disabilities. Excess costs are the costs for education of a student with a disability that exceed the average annual per student expenditure that a recipient incurred during the preceding school year. Compliance, with 34CFR, Section 300.16, requires that the District calculate the average per pupil expenditure and the minimum average amounts before funds received under the SPED IDEA cluster are used to pay for excess costs. Condition, Context and Cause: The District did not complete excess cost calculation as required. The District has not implemented formalized policies and procedures surrounding grant compliance to ensure required calculations are performed and maintained as required. This is a repeat finding from the prior year. Effect: Costs associated with the grant may be disallowed. Auditor?s Recommendation: Current established internal control policies and procedures should be reviewed and revised accordingly to ensure that excess cost calculations are calculated and documented with appropriate supporting documentation in a timely manner. We recommend the District work with the pass-through agency as deemed appropriate. View of Responsible Official and Planned Corrective Action: The Student Services Director will ensure compliance at the beginning of each fiscal year. Expected to be completed within the next fiscal year.

U.S. DEPARTMENT OF EDUCATION Passed through the Commonwealth of Massachusetts?Department of Elementary and Secondary Education Significant Deficiency 2020-002: Special Education Cluster ? SPED Grants to States, IDEA, Part B (#84.027) Pass-through program number: 0240-291568-202-0660 Criteria: A recipient receiving Federal awards under the SPED IDEA cluster may only use those funds for excess costs of providing special education and related services to children with disabilities. Excess costs are the costs for education of a student with a disability that exceed the average annual per student expenditure that a recipient incurred during the preceding school year. Compliance, with 34CFR, Section 300.16, requires that the District calculate the average per pupil expenditure and the minimum average amounts before funds received under the SPED IDEA cluster are used to pay for excess costs. Condition, Context and Cause: The District did not complete excess cost calculation as required. The District has not implemented formalized policies and procedures surrounding grant compliance to ensure required calculations are performed and maintained as required. This is a repeat finding from the prior year. Effect: Costs associated with the grant may be disallowed. Auditor?s Recommendation: Current established internal control policies and procedures should be reviewed and revised accordingly to ensure that excess cost calculations are calculated and documented with appropriate supporting documentation in a timely manner. We recommend the District work with the pass-through agency as deemed appropriate. View of Responsible Official and Planned Corrective Action: The Student Services Director will ensure compliance at the beginning of each fiscal year. Expected to be completed within the next fiscal year.

2019-001: Special Education Cluster ? SPED Grants to States, IDEA, Part B (CFDA #84.027) Pass-through program number: 0240-225168-2019-0660 Criteria: Established internal controls surrounding documentation of federal award compliance requirements should ensure that all charges to Federal awards for salaries and wages are based on records that accurately reflect the work performed. Accordingly, time and effort documentation is required to be maintained in accordance with established policies of the District. These records are to be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition and Context: During our audit work associated with time and effort certifications, we noted (2) instances where administrator signature was missing on time and effort certifications for all or part of the fiscal year. We noted (4) instances where time and effort certifications were not available for part of the fiscal year. We noted (2) instance where time and effort certifications were completed and dated on the same day for the entire fiscal year or completed prospectively for the entire fiscal year. Cause and effect: Current practices do not seem to provide for consistent documentation as it pertains to time and effort certifications and do not reasonably reflect the activity for which the employee is compensated. Inconsistent treatment of time and effort certifications may lead to unallowable costs being charged to the program. Questioned Costs: $239,368 Auditor?s Recommendation: Current internal control policies and procedures should be reviewed to ensure that all documentation associated with time and effort be reviewed to ensure a clear audit trail related thereto. The burden of proof falls on the District to ensure that all salary costs charged to a Federal grant accurately reflects the time and effort spent on allowable activities. Therefore, it is imperative that time and effort certifications be monthly, in accordance with District policies, and reviewed and signed by an administrative official ?after the fact? to ensure that salary costs charged to a program accurately reflect the time spent on program activities.

2019-002: Special Education Cluster ? SPED Grants to States, IDEA, Part B (#84.027) Pass-through program number: 0240-225168-2019-0660 Criteria: A recipient receiving Federal awards under the SPED IDEA cluster may only use those funds for excess costs of providing special education and related services to children with disabilities. Excess costs are the costs for education of a student with a disability that exceed the average annual per student expenditure that a recipient incurred during the preceding school year. Compliance, with 34CFR, Section 300.16, requires that the District calculate the average per pupil expenditure and the minimum average amounts before funds received under the SPED IDEA cluster are used to pay for excess costs. Condition, Context and Cause: For grant year 2019, the District did not complete the excess cost calculation as required by the grant. Effect: Costs may be disallowed. Auditor?s Recommendation: Current established internal control policies and procedures should be reviewed and revised accordingly to ensure that excess cost calculations are calculated and documented with appropriate supporting documentation in a timely manner. We recommend the District work with the pass-through agency as deemed appropriate.

2019-003: Special Education Cluster ? SPED Grants to States, IDEA, Part B (#84.027) Pass-through program number: 0240-225168-2019-0660 & 0240-147764-2018-0660 Criteria: Established internal controls surrounding allocable costs should ensure that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Additionally, internal controls surrounding allocable costs should ensure that a cost charged to a Federal award be adequately documented. Condition, context and questioned costs: During our audit work surrounding allowable costs over goods and services charged to IDEA, Part B, we noted misclassification of expenses of approximately $1,500 that did not fit the budgetary cost objective. Additionally, we noted (4) journal entries, occurring primarily towards the end of the period of performance for the first fiscal year 2018 grant, that were not supported by adequate documentation. When reviewing journal entry support, we noted that emails correspondence was the basis for reclassification journal entries. The aggregate amount of the four journal entries was $4,700. Cause and Effect: Current practices do not seem appropriate to ensure that all costs charged to a Federal program are reasonable and allocable based on documentation available for review. Auditor?s Recommendation: Although the costs identified in this finding did not conform to the budgetary line item, they appeared to be reasonable with respect to the overall program objective. We recommend that the District file amendments to the grant budget, if necessary, to ensure all costs charged to a Federal award conform to budgetary line items or cost objectives. Additionally, we recommend that all reclassification journal entries be documented with original source documentation, rather than email correspondence to ensure that reclassification journal entries among programs are reasonable and valid.

2019-004 Recommend enhancement of formalized documentation surrounding grant compliance Criteria and Condition: Implementation of the Uniform Guidance highlighted the importance and requirement for grantees to maintain internal control policies and procedures surrounding the compliance and administration of federal grants, focusing on clearly defining the key components (control environment, risk assessment, control activities, information and communication, monitoring). The District has yet to fully formalize documentation of all aspects of internal control surrounding grant compliance and administration as recommended by federal guidelines. Documentation of policies and procedures over grant compliance is currently in draft form and is expected to be approved by the School Committee in fiscal year 2020. Effect: Lack of documentation of internal controls policies and procedures may lead to situations of noncompliance with federal requirements. Perspective Information: This finding was previously reported in the prior year?s audit report as finding 2018-001. Questioned Costs: None. Auditor?s Recommendation: We recommend the District enhance the documentation surrounding aspects of grant compliance.

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