SHENANDOAH VALLEY SCHOOL DISTRICT

Finding 2025-001 Activities Allowed ALN 10.553/10.555/10.559/10.582 Child Nutrition Cluster Criteria: 2 CFR part 200 section 303 indicates that the District is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the District is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During testing, it was noted that 1 of the 40 transactions selected for testing in the Child Nutrition Cluster did not have sufficient audit evidence to demonstrate approval of an authorized pay rate prior to payment. There were no instances of noncompliance with activities allowed requirements related to the transactions selected. Cause: Controls over expenditures were not functioning as designed since a pay rate had no evidence of being approved due to oversight. Effect: Internal controls over this requirement were not operating effectively. Questioned Costs: None noted. Recommendation: The District should follow its established internal control procedures over activities allowed requirements. Views of Responsible Officials: Since this was an inadvertent clerical error, District will continue to review its’ internal control procedures over payroll and established procedures to ensure employee pay rates show signs of approval prior to payroll being processed.

Criteria: Pursuant to 2 CFR part 200 section 302 indicates that the District is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the District is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: All of the four reports selected for testing the Child Nutrition Cluster did not have sufficient audit evidence to demonstrate that they were approved prior to submission. There were no noted instances of noncompliance with reporting requirements related to the reports selected. Cause: Due to staff oversight, the District was not aware the reports needed to show signs of approval prior to submission. Effect: Internal controls over reporting were not operating effectively. Questioned Costs: None. Recommendation: The District should establish internal control procedures over reporting requirements. Management’s Response: The District will continue to review its internal control procedures over reporting and establish procedures to ensure reports show signs of approval prior to submission.

2022-001 Equipment and Real Property Management Education Stabilization Fund (ESSER) ? ALN 84.425 Criteria: Pursuant to 2 CFR part 200 section 439, capital expenditures for equipment and other capital expenditures are allowable as direct costs, provided that items with a unit cost of the lessor of $5,000 or the entity?s capitalization threshold have the prior written approval of the Federal awarding agency or pass-through entity. Furthermore, section 313(d)(1) specifies that property records must be maintained that include a description of the property, a serial or identification number, the source of funding for the property, who holds title, the acquisition date, and cost of the property. Condition: During testing it was noted the District performed building improvements over the capitalization threshold using ESSER funds without receiving prior approval from the Pennsylvania Department of Education. This asset also not included in the District?s property records. Cause: Due to staff oversight, the District did not consider all capital expenditures when obtaining prior approval from the Pennsylvania Department of Education. Effect: Internal controls are not functioning as designed and the District is not in compliance with equipment and real property management requirements of the program. Questioned Costs: None Recommendation: The District should establish procedures to ensure all capital expenditures with grant funding is appropriately approved prior to purchase and property records are maintained in sufficient detail to allow for the adequate tracking of all equipment purchased with grant funds. Management?s Response: There was confusion on the District?s part of what the threshold was for Capital Expenditures. Often times grants filing dates were due prior to all instructions being received. While the District unintentionally did not seek prior written approval for this purchase, it did clearly identify this purchase in the budget overview section in the E-Grant application for which it was approved. The District will subsequently identify and correctly maintain these assets to comply with federal property records. Now that the District is fully aware of the capital expenditure threshold, this should not occur again.

2022-002 Reporting Education Stabilization Fund (ESSER) ? ALN 84.425 Criteria: Pursuant to 2 CFR part 200 section 302(b)(2), a non-Federal entity must provide for accurate, current, and complete disclosure of the financial results of each Federal award or program. Condition: During testing it was noted one of the three PDE-2030 reports did not contain accurate information as the expenditures reported did not agree to the District?s general ledger. Cause: Due to oversight the District did not report expenditures on a cumulative basis. Effect: Internal controls are not functioning as designed and the District is not in compliance with reporting requirements of the program. Questioned Costs: None Recommendation: The District should develop procedures to ensure accurate information is reported to allow for adequate tracking of the financial results of each Federal award. In addition, reports should be reviewed by an appropriate individual prior to submission to ensure the data entered into the reports is consistent with the District?s records. Management?s Response: The District inadvertently omitted cumulative expenditures when filing the 2021-2022 PDE 2030 reports. The District did discover this in preparation for the 2021-2022 audit; but, not until after the filing of the 9/30/22 PDE 2030 report. The 12/31/22 PDE 2030 report will correct the cumulative expense to the correct amount. In the future, the District will take stronger measurers to ensure this will not reoccur.