Fulton County Community Unit School District No. 3Local Government

2024-002 U.S. Department of Education Pass-Through Illinois State Board of Education Education Stabilization Fund 84.425U COVID-19 American Rescue Plan- Elementary and Secondary School Emergency Relief (ARP-ESSER) Fund Federal Award Year: 2024, 2023, 2022 Finding: The District has insufficient reconciling processes for reporting the Education Stabilization Fund expenditures. Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Section 200.303 Internal Controls states: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal Award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award….” Condition: The expenditures reported to the Illinois State Board of Education for the ESSER III award did not agree to the District’s general ledger. Context: The District reported total program expenditures for year-end audit and to the Illinois State Board of Education as $378,735. The District provided general ledger detail for the program as of June 30, 2024, for $414,820. Effect: Federal awards are not properly reported to the state and the District is not ensuring federal expenditures incurred and amounts awarded are reconciled for timely reimbursement. Questioned Costs: $0 Identification as a repeat finding: This is a repeat finding. Cause: The District does separately code program expenditures on the general ledger. The District does not prepare monthly monitoring reports by program to ensure program expenditures, revenues, and reports are reconciled. Recommendation: We recommend the District code all expenditures charged to the program to a specific project code. If the District identifies costs initially charged to a non-program code, we recommend the District record adjustments to move the expenditures. We recommend the District require the submissions to the Illinois State Board of Education by reconciled by the Business Manager prior to the Superintendent submitting. We recommend the Business Manager monthly prepare a reconciliation to monitor the total award, the expenditures incurred, the totals reported to the state, and the amount received from the state. The report should incorporate a comparison of the award budget to actual to ensure any required budget adjustments are made before the next submission. Response and Corrective Action Plan: The District will review current processes for identifying, coding and reporting federal expenditures and implement processes to ensure amounts reported are supported by the District’s general ledger.

U.S. Department of Education; Pass-Through Illinois State Board of Education; Education Stabilization Fund 84.425D COVID-19 Elementary and Secondary School Emergency Relief (ESSER II) Fund; 84.425U COVID-19 American Rescue Plan-Elementary and Secondary School Emergency Relief (ARP-ESSER) Fund; Federal Award Year 2022, 2023; Finding: The District has insufficient reconciling processes for reporting the Education Stabilization Fund expenditures. Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Section 200.303 Internal Controls states: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal Award that provides reasonable assurance that the non-Federal Entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.... Condition: The expenditures reported to the Illinois State Board of Education for the ESSER II and ESSER III award did not agree to the District's general ledger. Context: The District reported total program expenditures for year-end audit and to the Illinois State Board of Education as $444,243. The District could only provide general ledger detail for the program as of June 30, 2023 for $443,368. Effect: Federal awards are not properly reported to the state and the District is not ensuring federal expenditures incurred and amounts awarded are reconciled for timely reimbursement. Questioned Costs: $875; Identification as a repeat finding: This is not a repeat finding. Cause: The District does separately code program expenditures on the general ledger. The District does not prepare monthly monitoring reports by program to ensure program expenditures, revenues, and reports are reconciled. Recommendation: We recommend the District code all expenditures charged to the program to a specific project code. If the District identifies costs initially charged to a non-program code, we recommend the District record adjustments to move the expenditures. We recommend the District require the submissions to the Illinois State Board of Education by reconciled by the Business Manager prior to the Superintendent submitting. We recommend the Business Manager monthly prepare a reconciliation to monitor the total award, the expenditures incurred, the totals reported to the state, and the amount received from the state. The report should incorporate a comparison of the award budget to actual to ensure any required budget adjustments are made before the next submission. Response and corrective action plan: The District will review current processes for identifying, coding, and reporting federal expenditures and implement processes to ensure amounts reported are supported by the District's general ledger.

Finding: The District does not have a process to ensure compliance with suspension and debarment rules for vendors within the federal program. Criteria: The April 2022 Office of Management and Budget Compliance Supplement states the following for Compliance Requirements-Suspension and Debarment: ?Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220?When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity,?is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov/HOME, (2) collecting a certification from the entity or, (3) adding a clause or condition to the covered transaction with that entity.? The Illinois State Board of Education states the following under General Procurement-All Programs, Contract Certification Forms: ?The following certification forms must be included with all solicitations, contracts, and/or renewal agreements as described below. The forms must be signed by each bidder/contractor as indicated.? The forms include the Certification Regarding Debarment, Suspension, Ineligibility, and Voluntary Exclusion - Lower Tier Covered Transactions (85-34) Condition: The District participates in a purchasing cooperative for the program. The cooperative issues a request for proposal each April to select the prime vendor for the next school year. The request for proposal does not require the vendors responding to the request to provide a certificate of suspension and debarment. The cooperative does not maintain documentation for a vendor search within the SAM database as an alternative test. Cause: The District has outsourced the prime vendor procurement function to the cooperative and does not monitor the cooperative?s compliance with suspension and debarment rules as established by the Illinois State Board of Education and the Office of Management and Budget.Effect: The District does not have adequate documentation to ensure compliance with federal requirements regarding suspension and debarment. The District could enter into a transaction with a suspended or debarred party. Questioned Costs: $0 Context: The District expended approximately $52,000 with the prime vendor for fiscal year 2022. Total program non-payroll expenditures were $64,000. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend the District require the cooperative to request certification regarding suspension and debarment with each request for proposal issued. We recommend the District require the certification to be provided to them and maintained by the prime vendor and any vendor the District incurs $25,000 or more in a federal program. Response and Corrective Action Plan: The District will require the cooperative to obtain the certification regarding suspension and debarment from vendors as outlined by the Illinois State Board of Education with each request for proposal the cooperative issues. Person Responsible: Jodee Mathis.

Finding: The District does not have a process to ensure compliance with verification of free and reducedprice applications. Criteria: The April 2022 Office of Management and Budget Compliance Supplement states the following for Compliance Requirements-Verification of Free and Reduce- Price Applications: ?By November 15th of each school year, the LEA?must verify the current free and reduced-price eligibility of households selected from a sample of applications that is has approved for free and reduced-price meals.? The Illinois State Board of Education issued the following in September 2021, ?The U.S. Department of Agriculture is requiring all School Nutrition Program sponsors who received and approved Household Eligibility Applications between July 1 and October 1, 2021, to conduct Verification for School Year 2021- 2022?.For Verification, School Food Authorities (SFAs) are required to verify income for a small percentage of households approved for free or reduced-price meals each school year.? Condition: The District selected an application to verify from a pile of all applications. The application selected for verification procedures was not approved for free or reduced-price meals and was the personal application of the employee performing the verification procedures. Error-prone applications were not selected. The population of applications and data submitted to the state of Illinois was from a manual count rather than the point-of-sale system. 76 Fulton County Community Unit School District #3 Schedule of Findings and Questioned Costs Year Ended June 30, 2022 Cause: The District did not use the food service software to randomly generate the list of applications to be verified. The District manually selected an application without consideration to the population or appearance of conflict of interest. Effect: The District did not perform verification procedures on an application that was approved for free or reduced-price meals. Questioned Costs: $0 Context: The District reported twenty-three applications for free or reduced-price meal benefits, two applications as error prone income applications, and one application to be tested on the Verification Summary Report submitted to the state of Illinois. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend the District use the food service point of sale system software to generate reports to complete the Verification Summary Report and to randomly generate the error prone application to be tested through verification procedures. We recommend the District require documentation of supervisory review of all verification reports, procedures, and conclusions. The supervisor should sign the report prior to submission and should sign the conclusion form of each verified application indicating review and approval. Response and Corrective Action Plan: The District will require the food service software to be used for verification data and selection of applications. The District will require documented supervisory approval of verification conclusions and reports submitted to the state of Illinois. Person Responsible: Jodee Mathis

Finding: The District does not maintain an inventory of capital assets funded with federal awards. Criteria: The July 2021 Office of Management and Budget Compliance Supplement states the following for Compliance Requirements- Equipment and Real Property Management: ?Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that?.2. 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?? Condition: The District does not have a system to maintain proper records for federally-funded capital assets. Cause: The District is a cash basis reporting entity and therefore has not implemented processes for capital asset management. Effect: The District does not have adequate documentation to ensure compliance with federal requirements regarding federal-funded capital assets. Questioned Costs: $0 Context: The District expended $221,754 for HVAC ductwork which is construction in progress as of June 30, 2021. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend the District implement a capital asset module with their financial software to maintain capital asset inventory records including the required information for federallyfunded capital assets. Response and Corrective Action Plan: The District will evaluation options for implementing a capital asset management system.