LABRAE LOCAL SCHOOL DISTRICTLocal Government

During the fiscal year, the District contracted with Trumbull County Educational Service Center (ESC) to provide purchased services. These services included expenditures of $62,545 which were paid for out of the Special Education fund and subject to the Federal procurement laws. Under 2 CFR §200.320 the District should have competitively bid the services needed or obtained price quotes from qualified sources as further defined in the School’s procurement policy. The District also has the option of procurement by noncompetitive proposal if approved by the grantor agency. The District did not provide a contract, price quotes from qualified sources, or a grantor approved noncompetitive proposal waiver. The District did not have the proper internal controls in place to ensure compliance over procurement. The District should competitively bid for services, obtain written price quotes from an adequate number of sources, or obtain approval for a noncompetitive proposal from the grantor agency. Failing to have the proper controls in place could result in questioned costs.

Review of Food Service Management Company Purchases

NONCOMPLIANCE AND MATERIAL WEAKNESS According to the Ohio Department of Education (ODE) grants manual, at the end of the grant period, entities are required to submit a final expenditure report (FER). A FER must be submitted to show how grant funds were expended during the grant period. Any unused funds will be reported on the FER and, if permitted, moved forward for the next fiscal year. If funds were awarded but no grant funds were expended during the year, an FER must be filed reflecting zero expenditures. Actual expenditures authorized by the approved project application and charges to the project special cost center are to be reported (report amounts actually expended, not encumbered). For the Educational Stabilization Fund - Elementary and Secondary School Emergency Relief (ESSER) program, it was determined that the ESSER II FER was understated by $36,369 and the ARP ESSER FER was understated by $70,978 for a combined total of $107,347. The District did not have have adequate controls in place to prevent or detect these errors. The District should implement procedures to verify that the Final Expenditure Report is submitted noting the correct amounts.

Management acknowledged its responsibility to establish and maintain effective internal controls to reasonable assure compliance with federal statutes, regulations and terms of conditions of federal awards and controls relating to preparing the Schedule of Expenditures of Federal Awards (the Schedule), as required by 2 CFR ? 200.303(a), in the audit engagement letter. Furthermore, 2 CFR Subpart F ? 200.510(b) requires the auditee prepare the Schedule for the period covered by the District?s financial statements which much include the total federal awards expended as determined in accordance with ?200.502. At a minimum, the schedule must: 1. List individual Federal programs by Federal agency. 2. For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. 3. Provide total Federal awards expended for each individual Federal program and the CFDA number or other identifying number when the CFDA information is not available. 4. Include the total amount provided to subrecipients from each Federal program. 5. For loan or loan guarantee programs described in ? 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. 6. Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in ?200.414 Indirect (F&A) costs. The Schedule provided by the District was overstated in total in the amount of $135,945 due to the following: ? Omission of NSLP Covid-19 Breakfast Program expenditures in the amount of $451. ? Omission of NSLP Covid-19 Lunch Program expenditures in the amount of $2,318. ? Overstatement of NSLP Lunch Program expenditures in the amount of $435,812. ? Omission of NSLP Covid-19 Summer Food Program expenditures in the amount of $44,105. ? Omission of NSLP Summer Food Program expenditures in the amount of $369,204 ? Omission of NSLP Fruit and Vegetable Program expenditures in the amount of $12,593. ? Overstatement of Title I Program expenditures in the amount of $74,742. ? Overstatement of Special Education Program expenditures in the amount of $7,940. ? Overstatement of Improving Teacher Quality Program expenditures in the amount of $5,908. ? Overstatement of Student Support Academic Enrichment Program expenditures in the amount of $2,603. ? Overstatement of Covid Emergency Relief Program expenditures in the amount of $37,611. In addition to NSLP funding, the District also received Covid-19 Federal Funding. Per 2 CFR 200 Appendix XI and per the Office of Management and Budget Memo dated June 18, 2020, Covid related funding must be identified on a separate line item with a designation identifying them as Covid. Adjustments, to which management has agreed, are reflected in the accompanying Schedule of Expenditures of Federal Awards. Ineffective internal controls related to federal grants could lead to noncompliance with program requirements. Errors and omissions to the Schedule could have an adverse effect on future grant awards by the awarding agency or agencies in addition to an inaccurate assessment of major federal programs that would be subjected to audit. District management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant and loan requirements, including Schedule reporting requirements. The District should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This may help ensure the District is in compliance with grant and loan requirements, the Schedule is complete and accurate, and major federal programs are accurately identified for audit.

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