Kane County Regional Office of Education No. 31

Criteria/Specific Requirement A critical part of the control structure surrounding the identification of grant expenditures eligible for reimbursement is the proper recording of such transactions in the general ledger. Adequate controls should be in place to ensure payroll changes are reflected in the Regional Office's records. Condition During control testing over payroll expenditures related to the Elementary and Secondary Emergency Relief (ESSER) III grant, it was noted that one of the employees charged to the grant was supposed to be paid by Kane County, on behalf of the Regional Office of Education, beginning with pay periods subsequent to November 30. Instead, a total of five pay periods continued to be charged to ESSER III after November 30 instead of the County. Each of these pay periods were requested for reimbursement with ESSER III funding. Regional Office of Education management did start properly recording the employee as a County expenditure beginning with the first payroll run in March 2022. Questioned Costs N/A Context Despite the incorrect posting of payroll costs to ESSER III accounts for five periods, the employee continued to perform the same tasks as a Truancy Officer, which was an allowable cost of the grant. However, the posting of activity to an incorrect grant account is an indicator of an incomplete control structure where mid-year changes in funding source for an employee may not be reviewed and verified to ensure proper posting in the general ledger. Effect Unallowable costs could be drawn down on grants, leaving the Regional Office of Education susceptible to potential noncompliance. Cause Controls were inadequate to ensure changes in funding sources for an employee are accurately and timely recorded in the general ledger. Recommendation We recommend the Regional Office of Education develop procedures to ensure timely communication of changes in funding source for a routine activity such as payroll. Such a review would ensure financial reporting accuracy and avoid potential noncompliance with grant funding. Management's Response When posting payroll in the Regional Office accounting system, net pay amounts for Kane County payroll and Regional Office payroll will be verified and any discrepancies will be discovered and corrected at that time. In addition, grant expenditure reports will be reviewed by the grant writer and finance director on a quarterly basis to ensure payroll costs posted to the grant are accurate.