Paris Union School District #95

Finding No. 2023-004 – Internal Controls over Compliance of Federal Awards (Partial Repeat 2022-005 and 2021-007) Federal Program Name: Education Stabilization Funds (Elementary and Secondary School Emergency Relief Fund Project Number: N/A CFDA Number: 84.425D and 84.425U Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 – Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 2, subpart E – the District must receive prior approval from the SEA (ISBE) for capital expenditures for equipment acquisition or improvements to land, buildings, or equipment. 2 CFR Part 4, Wage Rate Requirements – Recipients of ESF funds for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis-Bacon prevailing wage requirements. Condition: 1) During testing of compliance over disbursements, we noted the following: a. Eight (8) transactions totaling $474,924 appeared to be for capital purchases that did not have prior approval by the SEA b. Six (6) transactions totaling $52,117 were incurred where the District appeared to be subject to Davis-Bacon prevailing wage requirements but no documentation was retained. Additionally, a formal policy for complying with Davis-Bacon requirements is not in place for individual expenditures less than $25,000. 2) During testing of compliance over reporting, we noted the following: a. Expenditure reports were completed based on budgeted amounts rather than actual expenditures. In total, expenditure reports exceeded amounts reported in the District’s general ledger by $726,653. Questioned Costs: 1) N/A 2) $726,653 Context: 1) a. 8 exceptions of 60 transactions tested b. 6 exceptions of 60 transactions tested 2) Expenditure reports for ESSER programs totaled $3,411,524 for expenditures claimed for reimbursement while the District’s general ledger indicated $2,684,871 of ESSER-related expenditures. Effect: 1) The lack of proper internal controls of disbursements could result in the District paying for unallowable expenditures from the grant funds. 2) Noncompliance with grant agreement. Cause: Lack of proper oversight by District personnel. Recommendation: We recommend that the District appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District’s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Management’s Response: The District is working to implement that the auditor’s recommendation

Finding No. 2023-005 – Internal Controls over Compliance of Federal Awards Federal Program Name: Coronavirus State and Local Recovery Funds Project Number: N/A CFDA Number: 21.027 Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 – Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During testing of compliance over disbursements, we noted the following: 1) Five (5) instances where employees received pay rates in excess of three hundred percent of their normal pay rates received from unrestricted funds. 2) Fifteen (15) instances were noted where salaries were allocated to this program without documentation of time and effort. Questioned Costs: 1) N/A 2) N/A Context: 1) 5 exceptions of the total 40 payroll transactions tested 2) 15 exceptions of the total 40 payroll transactions tested Effect: 1) The lack of proper internal controls of disbursements could result in the District paying for unallowable expenditures from the grant funds. 2) Noncompliance with grant agreement. Cause: Lack of proper oversight by District personnel. Recommendation: We recommend that the District appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District’s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Management’s Response: The District is working to implement that the auditor’s recommendation.

Finding No. 2022-005 ? Internal Controls over Compliance of Federal Awards (Partial Repeat 2021-007) Federal Program Name: Twenty-First Century Community Learning Centers, Education Stabilization Funds (Elementary and Secondary School Emergency Relief (ESSER II) Fund Project Number: N/A CFDA Number: 84.287C, 84.425D, 84.425X Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 ? Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 2, subpart E ? Cost Principles, among other guidance states that costs charged to federal programs must be necessary and reasonable for the performance of the federal program. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit and the expenditure and/or allocation must be adequately documented. Condition: 1) During testing of compliance over disbursements, we noted the following: a. One (1) transaction that did not have indication of review or approval on the supporting documentation b. One (1) instance where the District paid sales tax in the amount of $135.71 c. One (1) instance where the District paid for a software subscription for the period 07/01/23-06/30/24, which is outside of the program period 2) During testing of compliance over reporting, we noted the following: a. One (1) instance where the expenditure report was filed five (5) days late b. Two (2) instances where the District appeared to complete the expenditure report submitted to Illinois State Board of Education from the budget versus the actual general ledger detail Questioned Costs: 1)a) $1,500.00 b) $135.71 c) $ 26,968.00 Context: 1) 3 exceptions of 47 disbursements tested The expenditure detailed in item 1(c) of the condition was completed prior to the release of the June 30, 2021 audit, when the District was made aware of the issue which was reported as finding 2021-007 in that audit. No additional expenditures outside of the grant period were noted after the date the June 30, 2021 audit was released. 2) 3 exceptions of 6 grants tested Effect: 1) The lack of proper internal controls of disbursements could result in the District paying for unallowable expenditures from the grant funds. 2) Noncompliance with grant agreement. Cause: Lack of proper oversight by District personnel. Recommendation: We recommend that the District appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District?s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Management?s Response: The District is working to implement that the auditor?s recommendation.

Finding No. 2021-006 ? Noncompliance with Federal Awards Federal Program Name: Child Nutrition Cluster Project Number: N/A CFDA Number: 10.553, 10.555, & 10.559 Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Agriculture Criteria/Specific Requirement: 2 CFR 200.303 ? Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 2, subpart E ? Cost Principles, among other guidance states that costs charged to federal programs must be necessary and reasonable for the performance of the federal program. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit and the expenditure and/or allocation must be adequately documented. 2 CFR 200.430 ? Compensation, states that standards of documentation for personnel compensation must be based on records that accurately reflect the actual work performed for the federal program and that in the event an employee works for multiple programs or for federal and non-federal programs/activities the District must allocate the employee?s compensation between the programs or activities based on a time and effort study or other reasonable allocation method. In addition, this section requires that the District?s payroll be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Per ISBE guidance related to purchasing equipment with Child Nutrition Cluster funding, all equipment purchased for the Child Nutrition Cluster must be deemed necessary and reasonable for the proper and efficient performance and administration of the Child Nutrition Cluster programs prior to purchasing. If the School Food Authority (SFA) wants to purchase equipment on ISBE?s pre-approved capital equipment list using Child Nutrition Cluster funds, the SFA must complete and maintain on file the Equipment Purchase/Capital Expenditure Attestation Form provided by ISBE and follow all applicable procurement regulations. If the SFA wants to purchase equipment not on the pre-approved equipment list using Child Nutrition Cluster funds, the SFA must seek approval from ISBE?s nutrition department prior to the purchase by completing and emailing the Equipment Purchase/Capital Expenditure Pre-Approval Request Form provided by ISBE and follow all applicable procurement regulations.1) We noted the following related to equipment purchases for the Child Nutrition Cluster: a) The District did not complete the Equipment Purchase/Capital Expenditure Attestation Form or the Equipment Purchase/Capital Expenditure Pre-Approval Request Form required by ISBE for any of their equipment purchases with Child Nutrition Cluster funding. b) Asset expenditures in the amount of $600,745 were not asset types listed on ISBE?s preapproved capital equipment list. In addition, none of the assets appeared to be assets that would be necessary and used solely for the administration of the Child Nutrition Cluster programs. There was an additional $98,974 in asset expenditures that should have been partially allocated to the Child Nutrition Cluster programs, however, all of the cost was allocated to the Child Nutrition Cluster programs. c) There were eight (8) purchases or projects from Child Nutrition Cluster funds that were greater than $25,000 and would have require a competitive bid under 105 ILCS 5/10-20.21. These eight (8) expenditures are also included Finding No. 2021-003, item 3, noncompliance with 105 ILCS 5/10-20.21. 2) We noted the following related to salaries and benefits for the Child Nutrition Cluster: a) The District paid bonuses of $113,840 ranging from $2,080 to $36,000 per employee for fourteen (14) District?s employees without any documentation of time and effort for each employee demonstrating the actual work performed related to the Child Nutrition Cluster programs. 3) We noted that the District was unable to provide adequate supporting documentation for five (5) of eighty one (81) expenditures tested. Questioned Costs: 1) (a) $-0- 1) (b) $699,019 1) (c) $-0- 2) (a) $113,840 3) $-0-Context: 1) (a) 100% of equipment purchases did not have the required attestation or pre-approval forms completed. 1) (b) Of the total $2,125,410 in non-payroll expenditures, $699,019 ($600,745 and $98,974) or 33% of the non-payroll expenditures were not considered allowable costs. 1) (c) No invitations for bids were noted for any of the projects identified. 2) (a) Of $253,382 in Child Nutrition Cluster program salaries and benefits, $113,840 or 45% are considered unallowable costs. 3) Five (5) of eighty one (81) expenditures (1%) did not have adequate support Effect: When the District does not follow the compliance guidelines as set forth in the Code of Federal regulations and the Illinois School Code, there is a significant risk that there may be material non-compliance with grant requirements, laws, and regulations. If the equipment purchases are deemed unallowable during any audit or review process, ISBE may disallow the purchases and require the SFA to replenish the school food account. Without proper time and effort documentation demonstrating the actual salaries and benefits cost attributable to the federal program, there is a significant risk that the federal program will be charged for cost not related to the administration of the federal program. ISBE may disallow the salaries and benefit cost and require the SFA to replenish the school food account. The lack of adequate supporting documentation increases the susceptibility of the District paying unallowable expenses. Cause: The District does not currently employ an individual that possesses the appropriate knowledge or expertise related to State and federal grant compliance requirements and Illinois School Code to ensure the District?s compliance with all relevant guidance.Recommendation: We recommend that the District appoint an individual that is knowledgeable of the State and federal compliance requirements set forth in the Code of Federal Regulation and 105 Illinois Compiled Statute ? School Code to oversee the District?s State and federal programs to ensure the District is in compliance with all applicable State and federal compliance requirements. Management?s Response: The District will implement the Auditor?s recommendation

Finding No. 2021-007 ? Noncompliance with Federal Awards Federal Program Name: Education Stabilization Funds (Elementary and Secondary School Emergency Relief (ESSER II) Fund Project Number: N/A CFDA Number: 84.425D Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 ? Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 2, subpart E ? Cost Principles, among other guidance states that costs charged to federal programs must be necessary and reasonable for the performance of the federal program. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit and the expenditure and/or allocation must be adequately documented. 2 CFR 200.430 ? Compensation, states that standards of documentation for personnel compensation must be based on records that accurately reflect the actual work performed for the federal program and that in the event an employee works for multiple programs or for federal and non-federal programs/activities the District must allocate the employee?s compensation between the programs or activities based on a time and effort study or other reasonable allocation method. In addition, this section requires that the District?s payroll be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: 1) We noted the following related to non-payroll expenditures for the ESSER II: a) We noted five (5) expenditures for software subscriptions related to subscription periods outside of the ESSER II program period of May 24, 2021 through October 31, 2021 and the District?s current fiscal year ending June 30,2021. The cost and related subscription periods are as follows: Cost Subscription Period $ 87,975 5 year Subscription (09/12/27-09/10/32) $ 10,470 10 Year Subscription (07/01/22-06/30/31) $ 30,000 5 year Subscription (07/01/27-06/30/31) $ 31,500 5 year Subscription (07/01/22-06/30/26) $ 18,750 5 year Subscription (07/29/22-07/28/27)The software subscriptions were for school messenger, SIS Sync, Math, ELA, Science, and Social Studies. b) We noted a project related to the installation of multiple cooling towers on several of the District?s buildings charged to the ESSER II program. The invoice in the amount of $360,450 was dated June 11, 2021, indicating the project was 100% complete and was paid in full by the District on June 15, 2021. The invoice did not have the engineering certification indicating the project was complete and had passed the engineer?s inspection. Per our confirmation directly with the contractor on November 19, 2021, at June 30, 2021 the contractor had only ordered materials and secured their subcontractor and he estimated that the project was approximately 20% complete and the project was not 100% complete until late November 2021. c) There were eight (8) purchases or projects from ESSER II grant funds that were greater than $25,000 and would have potentially require a competitive bid under 105 ILCS 5/10- 20.21, however, the District only published one (1) invitation for bid. Seven (7) of these expenditures are also included Finding No. 2021-003, item 3, noncompliance with 105 ILCS 5/10-20.21. 2) We noted the following related to salaries and benefits for the ESSER II Program: a) The District paid bonuses of $1,000 per employee for 152 of the District?s employees without any documentation of time and effort for each employee demonstrating the actual work performed related to preparing education lesson plans online for remote learning per the grant budget. In addition, many of these employees were not teachers. b) The District paid bonuses of $70,880 to the employees of Paris Cooperative High School without any documentation of time and effort for each employee demonstrating the actual work performed related to preparing education lesson plans online for remote learning per the grant budget. In addition, many of these employees were not teachers. 3) Of the sixteen (16) transactions tested, 100% of the ESSER II expenditures, the District was not able to provide adequate supporting documentation to support one (1) of the expenditures. Questioned Costs: 1) (a) $175,309 1) (b) $-0- 1) (b) $-0- 2) (a) $162,106 2) (b) $70,880 3) $36,700 Context: 1) Non-Payroll Expenditures: a) N/A b) N/A c) One (1) project out of eight (8) projects required to publish bid requests was published. 2) (a)-(b) 100% of the payroll expenditures for the ESSER II program lacked the required time and effort documentation for a federal program. 3) One (1) of sixteen (16) transactions (3%) lacked adequate support. Effect: When the District does not follow the compliance guidelines as set forth in the Code of Federal regulations and the Illinois School Code, there is a significant risk that there may be material non-compliance with grant requirements, laws, and regulations. If the equipment purchases are deemed unallowable during any audit or review process, ISBE may disallow the purchases and require the District to repay the grant funds. In addition, when the District prepays capital construction projects prior to the District?s engineer inspecting and certifying the project the District is at risk for lack of timely service and quality construction. Without proper time and effort documentation demonstrating the actual salaries and benefits cost attributable to the federal program, there is a significant risk that the federal program will be charged for cost not related to the administration of the federal program. ISBE may disallow the salaries and benefit cost and require the District to repay the grant funds. The lack of adequate supporting documentation increases the susceptibility of the District paying unallowable expenses. Cause: The District does not currently employ an individual that possesses the appropriate knowledge or expertise related to State and federal grant compliance requirements and Illinois School Code to ensure the District?s compliance with all relevant guidance. Recommendation: We recommend that the District appoint an individual that is knowledgeable of the State and federal compliance requirements set forth in the Code of Federal Regulation and 105 Illinois Compiled Statute ? School Code to oversee the District?s State and federal programs to ensure the District is in compliance with all applicable State and federal compliance requirements. Management?s Response: The District will implement the Auditor?s recommendation.

Criteria: 1. The District is required to report actual grant expenditures to the Illinois State Board of Education by the 20th day after the close of the month. 2. Semi-annual certifications are required for Title I personnel whose compensation is funded solely from Title I grant funding. Condition: 1. Expenditures recorded in the general ledger did not support the amounts reported to the grantor on the grant expenditure reports and reports were not submitted in a timely manner. Expenditure reports appeared to have been completed based on budgeted amounts, rather than actual amounts. 2. The District did not retain signed semi-annual certifications from Title I employees that work on the program 100% of their time. Context: The District did not meet the requirements in accordance with the grant agreement. Effect: 1. Expenditure reports reported to the grantor did not reflect the expenditures in the District's general ledger. Additionally, the grantor did not receive the expenditure report in a timely manner. 2. Grant requirements were not met. Cause: 1. Expenditure reports were completed based on budgeted amounts rather than actual amounts recorded in the general ledger. Expenditure reports were not submitted within grantor deadline requirements. 2. The District was unaware of this requirement. Recommendation: 1. We recommend the District complete expenditure reports based on actual amounts reflected in the general ledger. Additionally, we recommend the District monitor reporting requirements as set by the grantor to ensure timely filing. 2. We recommend the District obtain signed semi-annual certifications from employees whose compensation is funded solely from the Title I grant. Management's Response: Management agrees with this finding.

1. FINDING NUMBER: (See Schedule of Findings & Questioned Costs for footnote) 2019-005 2. THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Title I - Low Income; 2019 4. Project No.: 2018-4300; 2018-4399; 2019-4300 5. CFDA No.: 84.010A 6. Passed Through: Illinois State Board of Education 7. Federal Agency: U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) The District is required to report grant expenditure to the Illinois State Board of Education (ISBE) and federal funds wages to Teachers' Retirement System of the State of Illinois (TRS). 9. Condition (See Schedule of Findings and Questioned Costs for footnote) The District's accounting procedures are failing to properly accumulate and reconcile information required to be reported to ISBE on the Annual Financial Report and Grant Reports, as well as inaccurately reporting and calculating wages for TRS. 10. Questioned Costs (See Schedule of Findings and Questioned Costs for footnote) $11,072 11. Context (See Schedule of Findings and Questioned Costs for footnote) We compared grant expenditures reported to ISBE for Title I to expenditures recorded on the trial balance and they did not agree. We determined that the expenditures reported to ISBE were the budgeted amounts and not actual amounts expended. Title I expenditures on the trial balance were $11,072 less than what was reported to ISBE. We compared the wages reported on the TRS Final Annual Report of Earnings as being paid from federal funds to the wages paid from federal grants per the trial balance (adjsuted for non-TRS eligible employee wages) and they did not agree. We determined that wages paid from federal grants per the trial balance included a journal entry reclassification of wages that was excluded from the TRS report. Actual federal funds wages were higher than TRS reported federal funds wages by $65,746. 12. Effect Grant expenditures reported to ISBE were overstated and federal funds wages reported to TRS were understated. 13. Cause The District failed to reconcile actual grant expenditures and federal funds wages with the information reported to ISBE and TRS. 14. Recommendation The District should either automate the process used to generate these reports or put a system of checks and balances in place to ensure manual calculations, allocations, and reporting is done correctly. 15. Management's response (See Schedule of Findings and Questioned Costs for footnote) The District will reconcile their grant reports to the trial balance and will monthly pay out the TRS benefits for state and federal rates.

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