Phoenix Central School District

Condition: The District did not comply with the required standards of Support and Salaries and Wages as employees with time charged to the Education Stabilization Fund grants during the 2022‐2023 fiscal year did not complete monthly or semi‐annual certification forms or personnel activity reports (PAR) to verify their time distribution.   Criteria: The distribution of salaries and wages is to be supported by either time certifications or personnel activity reports or other equivalent documentation which meets the standards in Subsection 8.h(5) of the OMB Circular A‐87 Part 225 Appendix B. The certification of employees who work on one cost objective must be prepared at least semi‐annually. Personnel activity reports of employees who work on multiple activities or cost objectives must be prepared at least monthly and meet certain prescribed standards, such as accounting for the employee’s total compensation, and reflecting after‐the‐fact distribution of the actual activity of each employee.   The costs of such compensation are allowable to the extent that they satisfy the specific requirements of this and other appendices under 2 CFR Part 225, and that the total compensation for individual employees: (3) is determined and supported as provided in Subsection h. (8. Compensation for Personal Services A.(3).)   Cause: The District did not have a process in place to ensure employees completed the required time and effort certifications and comply with the required standards noted above.   Effect: It is more likely that the extent of effort charged to the various cost objectives may not be representative of the related time spent on the respective grants.   Recommendation: We recommend that management require copies of payroll certification forms or personnel activity reports be completed either monthly or semi‐annually based on the specific employees charged to the grant in order to remain compliant with allowable cost requirements.

Criteria: Expenditures incurred for voter-approved capital projects are reported in the capital projectsfund. In accordance with GASB 34, the District capitalizes fixed asset activity as a reconciling item on thegovernment-wide financial statements. Expenditures are reported as construction in progress until theproject is complete, where the total costs are capitalized and depreciated.Condition: The District contracts with a third party service to maintain fixed assets. Throughout the yearthe District sends additional disposal information to the third party to record within the fixed assetmodule. Reports are sent to the District and are used to reconcile the fixed asset activity reported in thegovernment-wide financial statements. In 2021-2022 the report of fixed asset additions did not agree tothe District's records by approximately $5.4 million for additions that were not entered in the properperiod. In addition, current year fixed asset additions did not reconcile to capital project expenditures byapproximately $895,000. The District did not perform a formal reconciliation of fixed asset activity,including construction in progress, to total project expenditures incurred resulting in proposedadjustments of approximately $31.5 million.Cause: The District does not perform a reconciliation of expenditures incurred within the fund financialstatements to the information sent to the third party service to ensure completeness and accuracy oftotal fixed asset activity.Effect: Fixed asset reports required adjustments of $31.5 million to agree to expenditures reported withinthe financial statements and construction in progress activity.Recommendation: We recommend the District review and reconcile fixed asset reports to projectexpenditures periodically throughout the year.Views of Responsible Official and Planned Corrective Actions: The District is reviewing fixed asset controlsand processes in place to implement additional reconciliation procedures moving forward.