Port Edwards School District

Federal Agency: U.S. Department of Education Federal Program Name: Elementary and Secondary School Relief Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number and Year: S425D210044 Federal Award Date 1/6/2021, S425U210044 Federal Award Date 12/6/2021 and 3/13/2020 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2022-714508-DPI-ESSERFII-163, 2022-714508-DPI-ESSERFIII-165, 2024-714508-DPI-LETRS-165 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: Segregation of duties is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction. Condition: When a transaction does not require a purchase order, there is no formal review and approval by any District employee other than the Business Director to ensure the activity and cost is allowable under the grant. There is no separate review of the payroll transactions processed by the Business Director and subsequently included on the grant claims. Questioned Costs: None. Context: While performing audit procedures, it was noted that when transactions did not require a purchase order, the transaction was compared to the approved grant budget by the Business Director but there was no other review by the Superintendent or other positions responsible for the grant activity prior to payment. It was also noted that there was no review of the payroll costs reported on the grant claims or labor distribution reports to ensure only the proper employees and related costs were coded to grant. Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District’s operations. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Repeat Finding: No. Recommendation: We recommend the District review its grant disbursement process to ensure that there is adequate segregation of duties in regards to initiating, authorizing, reviewing for grant allowability and approving purchases when purchase orders are not required, along with adding controls to ensure that the item purchased was received by the District. We also recommend the District review its payroll process and identify payroll tasks that could be reassigned to other district personnel or consider implementing additional review procedures specifically focused on payroll and related fringe benefit costs claimed on federal and state grants. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Program Name: Elementary and Secondary School Relief Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number and Year: S425D210044 Federal Award Date 1/6/2021, S425U210044 Federal Award Date 12/6/2021 and 3/13/2020 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2022-714508-DPI-ESSERFII-163, 2022-714508-DPI-ESSERFIII-165, 2024-714508-DPI-LETRS-165 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: 2 CFR 200.334 states that "The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records." Segregation of duties is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction. Condition: The District is required to file an annual report for ESSER. The supporting documentation used to enter the data into the reporting portal was not maintained and there was no review of the data entered into the form by someone other than the preparer. Accordingly, this does not allow for a proper segregation of duties for internal control purposes. Questioned Costs: None. Context: While performing audit procedures, it was noted that there was no review of the report completed by the finance director by someone else. The supporting documents used to complete the report was not retained by the District. Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District’s operations. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Repeat Finding: No. Recommendation: We recommend the District review its grant reporting processes and implement internal controls to help ensure that there is adequate segregation of duties in regards to grant reporting including special reports and that all supporting documentation is maintained with the filed copy of the report. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Program Name: Elementary and Secondary School Relief Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number and Year: S425D210044 Federal Award Date 1/6/2021, S425U210044 Federal Award Date 12/6/2021 and 3/13/2020 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2022-714508-DPI-ESSERFII-163, 2022-714508-DPI-ESSERFIII-165, 2024-714508-DPI-LETRS-165 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: 2 CFR 200.313(d)(2) states "A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years." Condition: The District has not completed a physical inventory of its capital assets as required by Uniform Guidance. Questioned Costs: None. Context: District used ESSER funds in 2021-22 as one funding source for a chem lab project. The project finished in 2022-23. The District has not historically used federal funds to purchase equipment and real property and were unaware of the requirements. Cause: The District did not have adequate procedures in place to ensure that a physical inventory was conducted within the required timeframe. Effect: Failure to conduct a physical inventory may result in inaccurate equipment records, which can lead to mismanagement of assets and potential loss or misuse of equipment. Repeat Finding: No. Recommendation: We recommend that the District establish and implement procedures to ensure that a physical inventory of equipment is conducted at least once every two years. This should include assigning responsibility for the inventory process, setting a schedule for inventory counts, and ensuring that the results are reconciled with the equipment records. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Identification Number and Year: N/A Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2024-714508-DPI-SB-SEVERE-546, 2024-714508-DPI-NSL-547, 2024-714508-DPI-SFSP-586 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: Segregation of duties is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction. Condition: When micropurchase transactions did not require a purchase order, there was no documented review by the Superintendent or other positions responsible for the grant activity prior to payment to ensure allowability and proper coding. Questioned Costs: None. Context: While performing audit procedures, it was noted that when micropurchase transactions did not require a purchase order, there was no documented review by the Superintendent or other positions responsible for the grant activity prior to payment to ensure allowability and proper coding Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District’s operations. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Repeat Finding: No. Recommendation: We recommend the District review its procurement process to ensure that there is adequate segregation of duties in regards to initiating, authorizing, reviewing for grant allowability and approving micro purchases, along with adding controls to ensure that the item purchased was received by the District. Views of responsible officials: There is no disagreement with the audit finding.

Child Nutrition Cluster Reporting Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Identification Number and Year: N/A Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Entity Identifying Numbers: 2022-714508-DPI-SB-SEVERE-546, 2022-714508-DPI-NSL-547, 2021-714508-DPI-SFSP-566 Award Period: July 1, 2021 ? June 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matter Criteria or specific requirement: Each claim for reimbursement should be based on accurate and precise data. Segregation of duties is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all parts of the grant reporting process. Condition: The Food Service Director is responsible for preparing and submitting claims related to the Child Nutrition Cluster. There is no review or verification by someone other than the preparer that the appropriate steps are being followed or completed. Accordingly, this does not allow for a proper segregation of duties for internal control purposes. Questioned costs: None. Context: While performing audit procedures, it was noted that the District did not have a review or approval of Child Nutrition claims by someone other than the preparer. Two of the six months tested in our sample had errors in the meal counts reported to Wisconsin Department of Public Instruction. Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District?s operations. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. The District would be under or overpaid for meals due to overclaiming number of meals served. Repeat Finding: No. Recommendation: We recommend the District implement a review procedure over reimbursement requests where someone other than the preparer reviews the claim to ensure counts agree back to supporting documentation prior to the reimbursement request being filed with the granting agency. Views of responsible officials: There is no disagreement with the audit finding.

Elementary and Secondary School Emergency Relief Fund Segregation of Duties Federal Agency: U.S. Department of Education Federal Program Name: Elementary and Secondary School Relief Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number and Year: S425D210044 Federal Award Date 1/6/2021 and S425U210044 Federal Award Date 12/6/2021 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Entity Identifying Numbers: 2022-714508-DPI-ESSERFII-163, 2022-714508-DPI-ESSERFIII-165 Award Period: July 1, 2021 ? June 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: Segregation of duties is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction. Condition: When a transaction does not require a purchase order, there is no formal review and approval by any District employee other than the Business Director to ensure the activity and cost is allowable under the grant. There is no separate review of the payroll transactions processed by the Business Director and subsequently included on the grant claims. Questioned costs: None Context: While performing audit procedures, it was noted that when transactions did not require a purchase order, the transaction was compared to the approved grant budget by the Business Director but there was no other review by the Superintendent or other positions responsible for the grant activity prior to payment. It was also noted that there was no review of the payroll costs reported on the grant claims or labor distribution reports to ensure only the proper employees and related costs were coded to grant. Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District?s operations. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Repeat Finding: No Recommendation: We recommend the District review its grant disbursement process to ensure that there is adequate segregation of duties in regards to initiating, authorizing, reviewing for grant allowability and approving purchases when purchase orders are not required, along with adding controls to ensure that the item purchased was received by the District. We also recommend the District review its payroll process and identify payroll tasks that could be reassigned to other district personnel or consider implementing additional review procedures specifically focused on payroll and related fringe benefit costs claimed on federal and state grants. Views of responsible officials: There is no disagreement with the audit finding.

Elementary and Secondary School Emergency Relief Fund Wage Rate Requirements Federal Agency: U.S. Department of Education Federal Program Name: Elementary and Secondary School Relief Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Identification Number and Year: S425D210044 Federal Award Date 1/6/2021 and S425U210044 Federal Award Date 12/6/2021 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Entity Identifying Numbers: 2022-714508-DPI-ESSERFII-163, 2022-714508-DPI-ESSERFIII-165 Award Period: July 1, 2021 ? June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations. Internal controls should be designed and implemented to prevent or detect noncompliance with this requirement. Condition: The District is responsible for ensuring the contractor provides the appropriate certified payrolls and reviewing them to ensure the prevailing wage rates are being met or exceeded. The District contracted with a third party to provide construction management including reviewing for Davis Bacon compliance; however, the District did not implement controls to monitor the construction management company to ensure this compliance requirement was met. Questioned costs: None. Context: While performing audit procedures, it was noted that the District's construction manager did obtain and review the appropriate certified payrolls; however, the District did not implement controls to monitor the construction manager to ensure this compliance requirement was met. Cause: The District was aware of the Davis Bacon Act and the compliance requirements surrounding it; however, the District was not aware they needed to document controls ensuring this was completed Effect: The District could pay vendors that are not in compliance with the Davis Bacon requirements. Repeat Finding: No. Recommendation: We recommended the District implement controls for monitoring third party contractors when the contractors are responsible for compliance requirements. Views of responsible officials: There is no disagreement with the audit finding.

Child Nutrition Cluster Procurement Segregation of Duties Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Identification Number and Year: N/A Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Entity Identifying Numbers: 2022-714508-DPI-SB-SEVERE-546, 2022-714508-DPI-NSL-547, 2021-714508-DPI-SFSP-566 Award Period: July 1, 2021 ? June 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: Segregation of duties is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction. Condition: When micro purchase transactions did not require a purchase order, there was no documented review by the Superintendent or other positions responsible for the grant activity prior to payment to ensure allowability and proper coding. Questioned costs: None Context: While performing audit procedures, it was noted that when micro purchase transactions did not require a purchase order, there was no documented review by the Superintendent or other positions responsible for the grant activity prior to payment to ensure allowability and proper coding. Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District?s operations. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. Repeat Finding: No Recommendation: We recommend the District review its procurement process to ensure that there is adequate segregation of duties in regards to initiating, authorizing, reviewing for grant allowability and approving micro purchases, along with adding controls to ensure that the item purchased was received by the District. Views of responsible officials: There is no disagreement with the audit finding.