Muskingum Valley Educational Service Center

Significant Deficiency – Documentation of Personnel Expenses Finding Number: 2024-001 Assistance Listing Number and Title: 84.027A/84.173A – Special Education Cluster Federal Award Identification Number / Year: 2023/2024 Federal Agency: U.S. Department of Education Compliance Requirement: Section A: Allowable Costs Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Prior Audit Finding Number: N/A Criteria: The Educational Service Center (ESC) indicated that the internal controls over compliance include supervisory approval of the documentation of personnel expenses. Condition: During our testing of internal controls related to allowable costs we noted one instance in which the documentation of personnel expenses was not approved by a supervisor. We noted the costs were allowable and the employee properly maintained documentation of personnel expenses. Effect: The lack of approval on the documentation of personnel expenses increases the risk of unallowable costs. Recommendation: We recommend the ESC ensure all documentation of personnel expenses is approved by a supervisory level employee. Official’s Response: See the Corrective Action Plan.

Planned Corrective Action: I acknowledge the identified instance where supervisory approval was not obtained for a documented personnel expense. We have taken immediate steps to address this issue by implementing a more robust process to ensure that all personnel expense documentation is reviewed and approved by a supervisory-level employee before submission. Additionally, we will reinforce this practice through staff training and remind supervisors of their responsibility to approve all personnel expense reports. We are committed to maintaining strong internal controls, and we will monitor the implementation of this process to ensure compliance and reduce the risk of unallowable costs in the future. Anticipated Completion Date: Immediately Responsible Contact Person: Danielle Devoll

Federal Equipment Management Finding Number: 2023-001 Assistance Listing Number and Title: AL# 84.425C, 84.425D, 84.425U, 84.425W COVID-19 Education Stabilization Fund Federal Award Identification Number / Year: None / 2023 Federal Agency: United States Department of Education Compliance Requirement: Equipment and Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.313(d)(1), which requires that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number (FAIN)), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.313(d)(2), which states, a physical inventory of the property must be performed, and the results reconciled with the property records at least once every 2 years. Due to a failure of internal controls, the Educational Service Center's inventory listing/capital asset records for equipment acquired under the Education Stabilization Fund were not complete and accurate. We identified three equipment items purchased in fiscal year 2023 that exceeded the Educational Service Center’s federal equipment threshold of $1,000 which were not included on the listing. We also identified four separate equipment items inadvertently recorded twice on the listing, with two separate identification numbers, however there was only one of each item purchased. In addition, there was no evidence a physical inventory of the equipment acquired under the Education Stabilization Fund had been performed within the preceding two years. The Educational Service Center should establish and implement policies and procedures to properly track equipment purchased with Federal funds in accordance with 2 C.F.R. §200.313(d). To effectively control equipment and maintain accountability over expenditures, the Educational Service Center should ensure all equipment is properly identified and recorded on their inventory and/or capital asset listing. Failure to do so could result in the Educational Service Center tracking an incorrect number and/or amount of assets, and misuse being undetected in a timely manner. Additionally, a physical inventory should be performed, at a minimum, once every two years to verify that equipment held per the inventory/capital asset listing actually exist and adequate documentation is maintained to support an inspection was performed. This will assist in detecting errors, fraud, theft, or omissions. Officials’ Response: See Corrective Action Plan.

I believe we did enter all the details of the items. Part of entering items into the inventory system includes entering the description, serial number where available/applicable, source of funding (If purchased from Federal Funds those Funds were identified in the system, we also identified the FAIN when possible), acquisition date, cost, use and location. When items are disposed of, we enter the disposal date, any proceeds and reason in the system. We did attempt to enter all the items by scanning purchases periodically throughout the year, however, we must have missed a couple items. Although we apparently missed a couple, we made an honest attempt to pick up and enter all items. We plan to correct this by reviewing purchases each week as purchase orders are paid and compiling the assets continuously throughout the year, rather than at periodic times during the year. For the duplicated items entered, we had one person being trained on the process and both the trainer and trainee entered these four items into the inventory system. Going forward, we will only have one person entering items utilizing one list and individual fixed asset addition worksheets. This process will be a better way of double checking to ensure items are not duplicated in the inventory asset records.