INDEPENDENT SCHOOL DISTRICT 2164

2024-004 Department of Agriculture, Passed through Minnesota Department of Education Federal Financial Assistance Listing 10.553/10.555/10.556 Child Nutrition Cluster Reporting Material Weakness in Internal Control over Compliance Criteria – A good system of internal control includes an adequate system for ensuring all free and reduced meal reimbursement requests meet the reporting guidelines. Condition – During the course of our engagement, we noted one instance where free and reduced meals were incorrectly submitted to MDE and did not agree to meal count sheets for the month. Cause – The District does not have an internal control system designed to review and ensure submitted meal counts agree to underlying records. Effect – A lack of internal controls over reporting could result the District receiving incorrect amounts of reimbursements from the granting agency. Questioned Costs – None reported Context/Sampling – A non-statistical sample of 4 out of 12 total reports were selected for testing. Repeat Finding from Prior Year(s) – No Recommendation – The District should review internal control procedures to ensure reimbursement requests are reviewed and agree to meal count sheets for the month. Views of Responsible Officials – There is no disagreement with the audit finding.

of Agriculture, Passed through Minnesota Department of Education Federal Financial Assistance Listing/CFDA Number 10.553/10.555 Child Nutrition Cluster Activities Allowed or Unallowed; Allowable Costs and Cost Principles Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – A good system of internal control includes an adequate system for ensuring all expenditures are properly recorded and allowable under the related federal grant in accordance with 2 CFR 200.430(i). Condition – During the course of our engagement, we noted ten instances where documentation of changes to contract wage rates or evidence of approved timesheets were not maintained. Cause – The District does not have an internal control system designed to review and maintain documentation for expenditures, including payroll transactions. Effect – A lack of internal controls over allowable costs and activities could result in improper use of federal funds and non‐compliance with the provisions of applicable grant requirements. Questioned Costs – $8,419 Context/Sampling – A non‐statistical sample of 60 transactions out of 2,215 total transactions were selected for testing, which accounted for $35,327 of $525,590 of federal program expenditures. Repeat Finding from Prior Year(s) – Yes, 2022‐004 Recommendation – The District should review internal control procedures to ensure federal expenditures are being properly reviewed for unallowable costs and activities. Supporting documentation should then be maintained once the review is documented and performed. Views of Responsible Officials – There is no disagreement with the audit finding.

Department of Agriculture, Passed through Minnesota Department of Education Federal Financial Assistance Listing/CFDA Number 10.553/10.555 Child Nutrition Cluster Eligibility Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – A good system of internal control includes an adequate system for ensuring all program participants are eligible under the related federal grant in accordance with 7 CFR 245.3 – 7 CFR 245.6. Condition – During the course of our engagement, we noted ten instances where documentation of program eligibility was not maintained. Cause – The District does not have an internal control system designed to review and maintain documentation for eligibility of program participants. Effect – A lack of internal controls over eligibility could result in improper use of federal funds and noncompliance with the provisions of applicable grant requirements. Questioned Costs – None reported Context/Sampling – A non‐statistical sample of 60 transactions out of 508 total participants were selected for testing. Repeat Finding from Prior Year(s) – No Recommendation – The District should review internal control procedures to ensure participant applications are being completed and properly reviewed for program eligibility. Supporting documentation should then be maintained once the review is documented and performed. Views of Responsible Officials – There is no disagreement with the audit finding.

Department of Agriculture, Passed through Minnesota Department of Education Federal Financial Assistance Listing/CFDA Number 10.553/10.555 Child Nutrition Cluster Special Tests & Provisions: Verification of Free and Reduced Price Applications Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – A good system of internal control includes an adequate system for ensuring all program participants are eligible under the related federal grant in accordance with 7 CFR 245.6a. Condition – During the course of our engagement, we noted the District did not retain proper support for the verification process of free and reduced eligibility. Cause – The District does not have an internal control system designed to review and maintain documentation for verification of eligibility status. Effect – A lack of internal controls over special tests and provisions could result in improper use of federal funds and non‐compliance with the provisions of applicable grant requirements. Questioned Costs – None reported Context/Sampling – All District verification selections were selected for testing. Repeat Finding from Prior Year(s) – No Recommendation – The District should review internal control procedures to ensure the required verification process is being completed, ensuring proper eligibility status. Supporting documentation should then be maintained once the review is documented and performed. Views of Responsible Officials – There is no disagreement with the audit finding.

2022-004 Department of Agriculture, Passed through Minnesota Department of Education Federal Financial Assistance Listing/CFDA Number 10.553/10.555 Child Nutrition Cluster Activities Allowed or Unallowed; Allowable Costs and Cost Principles Material Weakness in Internal Control over Compliance Criteria ? A good system of internal accounting control contemplates an adequate system for ensuring that adequate documentation of expenditures, including payroll transactions, is reviewed and maintained. Condition ? During the course of our engagement, we noted six instances where documentation of changes to contract wage rates was not maintained. Cause ? The District does not have an internal control system designed to review and maintain documentation for expenditures, including payroll transactions. Effect ? This deficiency could result in a misstatement to the financial statements that would not be prevented or detected. Questioned Costs ? None reported Context/Sampling ? A non-statistical sample of 40 transactions out of 1,417 total transactions were selected for testing, which accounted for $41,288 of $1,069,276 of federal program expenditures. Repeat Finding from Prior Year(s) ? No Recommendation ? A thorough review and reconciliation of supporting documentation for expenditures, including payroll transactions, should be performed before amounts are disbursed. Supporting documentation should be maintained once review is documented and performed. Views of Responsible Officials ? There is no disagreement with the audit finding.

2022-005 Department of Education, Passed through Minnesota Department of Education Federal Financial Assistance Listing/CFDA Number 84.425 Education Stabilization Fund Activities Allowed or Unallowed; Allowable Costs and Cost Principles Material Weakness in Internal Control over Compliance Criteria ? A good system of internal accounting control contemplates an adequate system for ensuring that adequate documentation of expenditures, including payroll transactions, is reviewed and maintained. Condition ? During the course of our engagement, we noted two instances where employees were not paid at the rate of pay noted in their contract. Cause ? The District does not have an internal control system designed to review and maintain documentation for expenditures, including payroll transactions. Effect ? This deficiency could result in a misstatement to the financial statements that would not be prevented or detected. Questioned Costs ? None reported Context/Sampling ? A non-statistical sample of 23 transactions out of 36 total transactions were selected for testing, which accounted for $741,540 of $759,829 of federal program expenditures. Repeat Finding from Prior Year(s) ? No Recommendation ? A thorough review and reconciliation of supporting documentation for expenditures, including payroll transactions, should be performed before amounts are disbursed. Supporting documentation should be maintained once review is documented and performed. Views of Responsible Officials ? There is no disagreement with the audit finding.

Criteria ? Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition ? In our testing of procurement, suspension and debarment it was identified that the District did not have a written policy on procurement that satisfied the requirements of 2 CFR sections 200.318 through 200.326. Cause ? Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect ? A lack of documented policies increase the overall risk that employees are not aware of the specific requirements with contracting and awarding contracts to lower tier entities. Questioned Costs ? None reported Context/Sampling ? All vendors, which totaled one, were selected for procurement testing Repeat Finding from Prior Years ? No Recommendation ?We recommend that management establish a written policy that addresses all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.326 and maintain adequate supporting documentation and records todocument history and methods of procurement and the procedures performed to comply with these CFR sections. Views of Responsible Officials ? There is no disagreement with the audit finding.