New Boston Local School DistrictLocal Government

2 CFR § 180.305 states that Non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR § 180.135. 2 CFR § 180.200 identifies “covered transactions” as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220. All nonprocurement transactions as defined in 2 CFR § 180.970 (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 CFR § 180.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov/content/home); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. School District Policy # 6325, Procurement - Federal Grants/Funds, states that for contracts over $25,000, the School District shall confirm that the vendor is not debarred or suspended by either checking the Federal government's System for Award Management, which maintains a list of such debarred or suspended vendors at www.sam.gov; collecting a certification from the vendor; or adding a clause or condition to the covered transaction with that vendor. The School District did not have the proper internal controls in place to verify that all entities, with whom the School District had entered into covered transactions, had not been suspended or debarred. During testing of procurement for the Child Nutrition Cluster, we noted three instances (100% of vendors which this applied) in which the program had a payment to a vendor of more than $25,000 and there was no evidence the School District checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verification was not completed for the covered transaction for the Child Nutrition Cluster during fiscal year end June 30, 2025. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred. Prior to contracting with vendors that will be paid with federal funds, the School District should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.

Material Weakness/Noncompliance Finding Number: 2022-001 Assistance Listing Number and Title: AL #84.425D COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: 2022 Federal Agency: US Department of Education Compliance Requirement: Equipment Pass-Through Entity: Ohio Department of Education Repeat Finding from Prior Audit? No 2 CFR ? 3474.1 gives regulatory effect to the Department of Education for 2 CFR ? 200.313(c) through (d) which require that: (c) Equipment must be used in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award or, when appropriate, under other Federal awards; however, the non-Federal entity must not encumber the equipment without prior approval of the Federal awarding agency. (d) Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: 1. 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), who holds title, the acquisition date, 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. A physical inventory of the property must be taken and the results reconciled with the property records at least once every 2 years. 3. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. 4. Adequate maintenance procedures must be developed to keep the property in good condition. 5. If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures), ESF funds may be used for these purposes. Recipients and subrecipients may use ESF funds to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. In addition, with prior approval by the ED or the pass-through entity, recipients and subrecipients may use ESF funds to purchase real property and perform construction for improvements to land, buildings, or equipment that meet the overall purpose of the ESF program, which is ?to prevent, prepare for, and respond to? the COVID-19 pandemic. In addition to the guidance noted above, the Uniform Guidance at 2 CFR ? 200.407 requires prior written approval from either the Department or the State (Governor or SEA, as applicable) for certain costs, such as the purchase of real property; equipment and other capital expenditures; entertainment costs; and travel costs. The School District failed to properly track assets purchased or improvements completed with ESF (specifically Elementary and Secondary School Emergency Relief or ESSER) funds in their Equipment Inventory System. This resulted in unrecorded assets of approximately $209,788 purchased with ESSER Funds not recorded in the inventory system. This would not allow for proper tracking as required above. This was the result of the School District Treasurer not adding all assets to the system. The School District also did not receive proper approval before the purchase of Phenomenal Aire Units. We recommend the School District Treasurer review the Equipment Inventory System and adjust it to include all assets purchased with ESSER Funds. We further recommend the School District ensure it receives all proper approvals as required for any capital asset expenditures purchased with ESSER funds. Officials? Response: Moving forward the School District Treasurer will make sure and double check all inventory purchased with ESSER Funds are in the inventory system if it is over the capital asset threshold. Also, she will make sure all capital asset expenditures purchased with ESSER funds have proper approval.

Material Weakness/Noncompliance Finding Number: 2022-002 Assistance Listing Number and Title: AL #84.425D COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: 2022 Federal Agency: US Department of Education Compliance Requirement: Prevailing Wage Pass-Through Entity: Ohio Department of Education Repeat Finding from Prior Audit? No 2 CFR ? 3474.1 provides the Department of Education (DOE) adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200. Thus, this section gives regulatory effect to the OMB guidance and supplements the guidance as needed for the DOE, except as otherwise noted in that section. 2 CFR part 200, Appendix II(D), states that all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following. . .the ?Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144 and 3146-3148) as supplemented by Department of Labor regulations (29 CFR ? 5, ?Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction?). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency.? In 2022, the School District incurred expenses with a contractor for work done on the new playground area in the total amount of $64,044 paid out of the Elementary and Secondary School Emergency Relief Fund. The School District also had expenses with a company to install air units in the total amount of $113,432 paid out of the Elementary and Secondary School Emergency Relief Fund. Both of these payments included costs for both labor and materials and would have been subject to prevailing wage laws. However, as a result of a lack of proper internal controls, the required clauses concerning prevailing wage rates were not included in the contract for these services. Also, the requirement that the contractor shall submit weekly, for each week in which any contract work is performed, a copy of all payrolls to the School District were not included in the contract. Without proper controls over prevailing wage rate requirements, there is an increased risk that the School District and its contractors and subcontractors are not in compliance with applicable federal regulations. Additionally, noncompliance could result in federal funding being reduced or taken away, or other sanctions imposed by the federal grantor agency. The School District should ensure contracts for construction in excess of $2,000 paid with federal grant monies include a provision that contractors comply with the prevailing wage rate provisions and ensure certified payroll reports are provided by the contractor weekly. The School District should also maintain the certified payroll reports to document compliance with the program requirements. In addition, the School District should report all suspected violations to the Federal awarding agency. Officials? Response: Going forward any construction contracts that exceed $2,000, the School District Treasurer and Superintendent will ensure that the contractor will meet all the Wage Rate Requirements and certified payroll reports are submitted weekly by the contractor. Also, the School District Treasurer and Superintendent will ensure procurement procedures cover the requirements of the Davis Bacon Act.

Finding Number: 2022-003 Assistance Listing Number and Title: AL #84.425D COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: 2022 Federal Agency: US Department of Education Compliance Requirement: Reporting Pass-Through Entity: Ohio Department of Education Repeat Finding from Prior Audit? No 2 CFR ? 3474.1 gives regulatory effect to the Department of Education for 2 CFR ? 200.328 which provides the Federal awarding agency may solicit only the standard, OMB-approved governmentwide data elements for collection of financial information. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Ohio Department of Education Grants Manual requires, at the end of the grant period, that entities submit a final expenditure report (FER). A Final Expenditure Report must be submitted to show how grant funds were expended during the grant period. The amounts by object code submitted by the School District in the Final Expenditure Report for the Elementary and Secondary School Emergency Relief Grant (grant year 2022) varied from the underlying system data due to the Treasurer incorrectly posting Purchased Services of $66,291 as Supplies and incorrectly posting Supplies of $116,117 as Purchased Services. Total expenditures agreed to the underlying School District records. This error in posting was due to oversight by the Treasurer. The Treasurer should review the annual Final Expenditure Reports and verify the correct information is provided to the grantor. Officials? Response: School District Treasurer will carefully review all Final Expenditure Reports to ensure that she has correctly put the correct cost in the appropriate column going forward.