Weathersfield Local School DistrictLocal Government

2 CFR ? 400.1 and 2 CFR ? 3474.1 give regulatory effect to the U.S. Department of Agriculture and Department of Education for ? 200.430, which provides, in part, compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. The District used Nutrition Cluster funds to pay a portion (28%) of an employee?s salary for the purpose of this employee processing Nutrition Cluster invoices. Payroll costs of the District employee was allocated based on estimates of time spent by the employee and no supporting documentation was received to indicate allocations were based on actual activities. Therefore, these costs are not considered actual costs. Failure to obtain adequate documentation to verify that expenses are allocated based on supported actual activities or supported percentages, could result in the District paying the employee an incorrect amount from the Nutrition Cluster funds. The total allocation to the Nutrition Cluster for this employee including fringe benefits was $16,402. There was no supporting documentation that indicated the allocation utilized was based on actual activities. While using an estimate may be adequate, the documentation must meet the requirements of 2 CFR 200.405(a). 2 CFR 200 Appendix VII Paragraph D states ?All departments or agencies of the governmental unit desiring to claim indirect costs under Federal awards must prepare an indirect cost rate proposal and related documentation to support those costs. The proposal and related documentation must be retained for audit in accordance with the records retention requirements contained in ?200.333 Retention Requirements for Records.? The District charges a portion of utility payments to the Food Service Fund. We tested one transaction for natural gas charges where the District charged 17% of the invoice to the Food Service Fund. Per inquiry, each utility type has a different percentage charged to the Food Service Fund. The District has no documentation on how the percentages charged were determined. Total utility payments charged to the Food Service Fund during the fiscal year were $16,351. Failing to have the appropriate controls in place could result in the District paying unallowable expenditures with Nutrition Cluster funds. The likely questioned costs based on these exceptions is $32,753. The District should implement procedures to obtain and review supporting documentation for all allocation percentages utilized to pay employees with Nutrition Cluster funds. The review should ensure allocation percentages used are appropriate, based on supported documentation, and not based on estimates. Documentation of each allocation methodology used should be maintained to support the percentages utilized. Additionally, the District should calculate and document how utility percentages will be allocated to the Food Service Fund.

Management acknowledged its responsibility to establish and maintain effective internal controls to reasonably assure compliance with federal statutes, regulations and terms and conditions of federal awards and controls relating to preparing the Schedule of Expenditures of Federal Awards (the Schedule), as required by Uniform Guidance (2 CFR ? 200.303(a)), in the audit engagement letter. Furthermore, Uniform Guidance (2 CFR Subpart F ? 200.510(b)) requires the auditee prepare the Schedule for the period covered by the District?s financial statements which must 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 had the following misstatements: ? Expenditures reported for School Lunch Program and School Breakfast Program did not agree to the District's financial records. Lunch expenditures were understated by $14,819 and Breakfast expenditures were understated by $4,867. ? Donated Commodities Non-Cash transactions of $27,143.74 were not reported. ? Federal schedule only included FY20 program expenditures for Title I, Special Education, and Preschool Special Education grants. The District did not include FY19 program expenditures spent during FY20 of $6,056, $47,218, and $3,046, respectively. In addition to NSLP funding, the District also received Covid-19 Federal Funding. Per AOS SEFA Guidance, 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. 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. Entity management should implement a system to review the Schedule for errors and omissions. This may help ensure the Schedule is complete and accurate and major federal programs are correctly identified for audit.

2 CFR ? 400.1 and 2 CFR ? 3474.1 give regulatory effect to the U.S. Department of Agriculture and Department of Education for ? 200.430, which provides, in part, compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. The District used Nutrition Cluster funds to pay a portion (30%) of an employee's salary for the purpose of this employee processing Nutrition Cluster invoices. Payroll costs of the District employee was allocated based on estimates of time spent by the employee and no supporting documentation was received to indicate allocations were based on actual activities. Therefore, these costs are not considered actual costs. Failure to obtain adequate documentation to verify that expenses are allocated based on supported actual activities or supported percentages, could result in the District paying the employee an incorrect amount from the Nutrition Cluster funds. The total allocation to the Nutrition Cluster for this employee including fringe benefits was $16,884. There was no supporting documentation that indicated the allocation utilized was based on actual activities. While using an estimate may be adequate, the documentation must meet the requirements of 2 CFR 200.405(a). The District should implement procedures to obtain and review supporting documentation for all allocation percentages utilized to pay employees with Nutrition Cluster funds. The review should ensure allocation percentages used are appropriate, based on supported documentation, and not based on estimates. Documentation of each allocation methodology used should be maintained to support the percentages utilized.