Independent School District No. 001Local Government

Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, and 10.559 Award Period: Year Ended June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Condition: The District did not retain documentation to support that the vendors used were not suspended or debarred. Criteria or specific requirement: Federal guidelines require grant recipients to perform verification procedures that a vendor is not federally suspended or debarred prior to entering into a covered transaction. Questioned Costs: None. The vendor was not federally suspended or debarred. Context: During suspension and debarment testing, three of the three covered transactions tested did not have support retained that the vendor was not federally suspended or debarred. Effect: Lack of proper documentation of controls over compliance with suspension and debarment requirements could result in paying suspended or debarred vendors. This could ultimately result in questioned costs. After review of vendors, it was noted that no vendors used were on the suspension or debarment list. Cause: Oversight. Repeat Finding: No. Recommendation: We recommend the District implement additional procedures to ensure suspension and debarment documentation is retained. Views of responsible officials: There is no disagreement with the audit finding.

Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal agency: U.S. Department of Education Federal program title: Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U, 84.425W Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): Not applicable Award Period: July 1, 2022 - June 30, 2023 Type of Finding: • Significant deficiency in internal control over compliance Criteria or Specific Requirement: Per 2 CRF section 200.430(i), the District is to maintain records for salaries and wages. This includes proper approval of the salaries and wage rates. Condition: During our testing of allowable costs/cost principles, it was noted that the District Board did not approve wage rates for certain employees. Questioned Costs: Not applicable. Context: 1 of 7 employees tested did not have their wage rate approved by the Board. Cause: Oversight. Effect: Lack of proper documentation of controls over compliance with allowable cost requirements could result in paying employees more than actually required. This could ultimately result in questioned costs. Repeat Finding: No Recommendation: We recommend the District Board approve the wage rate of all employees via contracts or separate, individual approval. Views of Responsible Official: There is no disagreement with the finding.

2022-003 ? Suspension and Debarment Federal agency: U.S. Department of Agriculture Federal program title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, and 10.559 Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): 1-0001-000 Award Period: July 1, 2021 - June 30, 2022 Type of Finding: ? Significant deficiency in internal control over compliance Criteria or Specific Requirement: Per 2 CRF section 180.995, the District should have controls in place to review vendors showing they are not excluded or debarred for participating in procurement transactions that use federal funds. Condition: During suspension and debarment testing, it was noted that the District did not verify that the vendors/contractors were not suspended or debarred until after awarding the contract. Questioned Costs: Not applicable. Context: 2 of 2 vendors tested had no review before the awarding the contract to ensure they were not suspended or debarred. Cause: Oversight. Effect: Lack of proper documentation of controls over compliance with suspension and debarment requirements could result in paying suspended or debarred vendors. This could ultimately result in questioned costs. After review of vendors, it was noted that no vendors used were on the suspension or debarment list. Repeat Finding: Yes Recommendation: We recommend the District review suspension and debarment before entering into contracts with vendors. Views of Responsible Official: There is no disagreement with the finding.

2022-004 ? Special Provisions ? Wage Rate Requirements Federal agency: U.S. Department of Education Federal program title: Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U and 84.425W Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): S425C210015 and S425D210045 Award Period: July 1, 2021 - June 30, 2022 Type of Finding: ? Significant deficiency in internal control over compliance Criteria or Specific Requirement: Per 29 CFR Part 5, 2 CFR Part 176, subpart C and 2 CFR section 200.326, the District is required to include in their construction contract subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and the Department of Labor regulations. This includes a requirement for the contractor or subcontractor to submit the District weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance. Condition: During special provisions testing, it was noted that the District has the correct wording relating to the wage rate requirements in the contracts but did not obtain any documentation from the contractor ensuring that the contractor was following the wage rate requirements. Questioned Costs: Not applicable. Context: 1 out of 1 contractor selected has the proper wording relating to the Wage Rate Requirements in the contract but the District does not receive any documentation verifying the compliance. Cause: Oversight. Effect: Lack of proper documentation of controls over compliance with special provision requirements could result in paying contractors that are not in compliance with the Wage Rate Requirements set by the Department of Labor. This could ultimately result in questioned costs. Repeat Finding: Not applicable. Recommendation: We recommend that the District obtain the weekly payrolls and statement of compliance from contractors that work on construction contracts financed by federal assistance funds. Views of Responsible Official: There is no disagreement with the finding.

2021-003 ? Suspension and Debarment Federal agency: U.S. Department of Agriculture Federal program title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, and 10.559 Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): 1-0001-000 Award Period: July 1, 2020 - June 30, 2021 Type of Finding: ? Material weakness in internal control over compliance Criteria: Per 2 CRF section 180.995, the District should have controls in place to review vendors showing they are not excluded or debarred for participating in procurement transactions that use federal funds. Condition: During suspension and debarment testing, it was noted that the review process was not operating effectively. There was no support for review of certification regarding debarment, suspension, and responsibility for 2 of 2 vendors tested. Questioned Costs: Not applicable. Context: 2 of 2 vendors tested had no review to ensure they were not suspended or debarred. Cause: Oversight. Effect: Lack of proper documentation of controls over compliance with suspension and debarment requirements could result in paying suspended or debarred vendors. This could ultimately result in questioned costs. After review of vendors, it was noted that no vendors used were on the suspension or debarment list. Repeat Finding: Not applicable. Recommendation: We recommend the District implement procedures and controls to ensure vendors are not suspended or debarred. Views of Responsible Official: There is no disagreement with the finding.

2021-004 ? Cash Management Federal agency: U.S. Department of Education Federal program title: Education Stabilization Fund Assistance Listing Number: 84.425C and 84.425D Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): S425C200015 and S425D200045 Award Period: July 1, 2020 - June 30, 2021 Type of Finding: ? Material weakness in internal control over compliance Criteria: The District should have controls in place to ensure the accuracy of all cash management draws for the District?s Education Stabilization Fund requests. These controls should be formally documented to ensure they have been properly implemented. Condition: During cash management testing, it was noted that the review process was not operating effectively. There was no review process completed for 5 out of 5 reimbursement requests tested. Questioned Costs: Not applicable. Context: 5 out of 5 reimbursement requests selected did not have proper review process implemented. Cause: Oversight. Effect: Lack of proper documentation of controls over compliance with cash management requirement could result in errors being reported and going undetected or not detected in a timely manner. This could ultimately result in questioned costs. Repeat Finding: Not applicable. Recommendation: We recommend that the District implement procedures and controls to ensure the reimbursement requests are accurate before submitting. Views of Responsible Official: There is no disagreement with the finding.

2021-005 ? Reporting Federal agency: U.S. Department of Education Federal program title: Education Stabilization Fund Assistance Listing Number: 84.425C and 84.425D Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): S425C200015 and S425D200045 Award Period: July 1, 2020 - June 30, 2021 Type of Finding: ? Significant deficiency in internal control over compliance Criteria: The District should have controls in place to ensure the accuracy of all reports required to be submitted for the District?s Education Stabilization Fund requests. These controls should be formally documented to ensure they have been properly implemented. Condition: During reporting testing, it was noted that the review process was not operating effectively. There was no review process completed for the reports required to be submitted. Questioned Costs: Not applicable. Context: 1 out of 1 required report selected did not have proper review process implemented. Cause: Oversight. Effect: Lack of proper documentation of controls over compliance with reporting requirement could result in errors being reported and going undetected or not detected in a timely manner. This could ultimately result in questioned costs. Repeat Finding: Not applicable. Recommendation: We recommend that the District implement procedures and controls to ensure the required reports are accurate before submitting. Views of Responsible Official: There is no disagreement with the finding.

2021-006 ? Allowable Costs/Allowable Activities Federal agency: U.S. Department of Education Federal program title: Education Stabilization Fund Assistance Listing Number: 84.425C and 84.425D Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): S425C200015 and S425D200045 Award Period: July 1, 2020 - June 30, 2021 Type of Finding: ? Significant deficiency in internal control over compliance Criteria: The District should have controls in place to ensure the accuracy of all journal entries used to allocate expenses for the District?s Education Stabilization Fund. These controls should be formally documented to ensure they have been properly implemented. Condition: During allowable costs/allowable activities testing, it was noted that journal entries made to allocate expenses related to the grant were not reviewed by someone other than the preparer. Questioned Costs: Not applicable. Context: 2 out of 2 journal entries selected did not have proper review process implemented. Cause: Oversight. Effect: Lack of proper documentation of controls over compliance with allowable costs/allowable activities could result in errors being reported and going undetected or not detected in a timely manner. This could ultimately result in questioned costs. Repeat Finding: Not applicable. Recommendation: We recommend that the District implement procedures and controls to ensure the journal entries are accurate before posting. Views of Responsible Official: There is no disagreement with the finding.

Federal agency: U.S. Department of Agriculture Federal program title: Child Nutrition Cluster CFDA Number: 10.553, 10.555, 10.556, and 10.559 Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): 1-001-000 Award Period: June 30, 2020 Type of Finding: ? Material weakness in Internal control over compliance Criteria or specific requirement: In the case of the National School Lunch Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children from households with incomes at or below 130 percent of the Federal poverty level are eligible to receive meals or milk free under the School Nutrition Programs. Children from households with incomes above 130 percent but at or below 185 percent of the Federal poverty level are eligible to receive reduced price meals. A child?s eligibility for free or reduced price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. The District should have internal controls designed to ensure proper documentation of eligibility. Condition: It was noted during eligibility testing, there is no one at the District reviews the applications after the initial eligibility determination to ensure students are classified correctly. Questioned costs: Not applicable. Context: 40 of 40 applications tested had no review process completed. Cause: District personnel did not review applications after the initial eligibility determination. Effect: Lack of control to ensure proper classification of student participating in the child nutrition cluster programs, could result in improper classifications and errors in meal count reports. This could ultimately result in questioned costs. Repeat Finding: Yes ? See prior year finding 2019-004. Recommendation: We recommend the District implement controls to ensure all applications are reviewed to ensure the students participating in the child nutrition cluster programs are classified correctly. Views of responsible official: There is no disagreement with the finding.

Federal agency: U.S. Department of Agriculture Federal program title: Child Nutrition Cluster CFDA Number: 10.553, 10.555, 10.556, and 10.559 Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): 1-001-000 Award Period: June 30, 2020 Type of Finding: ? Material Weakness in Internal control over compliance Criteria or specific requirement: Procurement standards require a policy in place to be followed to ensure entities are properly procuring goods and services and to ensure vendors and contractors are not suspended or debarred. Condition: During procurement and suspension and debarment testing it was noted that the District does not have a procurement policy. Questioned costs: Not applicable. Context: Procurement transactions tested had no review to ensure purchases were following procurement requirements or to ensure vendors were not suspended or debarred before entering a contract. Cause: The District has not approved a procurement policy. Effect: Lack of control to procurement transactions are following regulations could result in paying suspended or debarred vendors or contractors. It could also cause the District to be out of compliance with federal requirements over procurement. Repeat Finding: Yes ? See prior year finding 2019-005. Recommendation: We recommend the District approve a procurement policy and implement controls to ensure it is being followed. Views of responsible official: There is no disagreement with the finding.

Federal agency: U.S. Department of Agriculture Federal program title: Child Nutrition Cluster CFDA Number: 10.553, 10.555, 10.556, and 10.559 Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): 1-001-000 Award Period: June 30, 2019 Type of Finding: ? Material weakness in Internal control over compliance Criteria or specific requirement: In the case of the National School Lunch Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children from households with incomes at or below 130 percent of the Federal poverty level are eligible to receive meals or milk free under the School Nutrition Programs. Children from households with incomes above 130 percent but at or below 185 percent of the Federal poverty level are eligible to receive reduced price meals. A child?s eligibility for free or reduced price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. The District should have internal controls designed to ensure proper documentation of eligibility. Condition: It was noted during eligibility testing, there is no one at the District reviews the applications after the initial eligibility determination to ensure students are classified correctly. Questioned costs: Not applicable. Context: 40 of 40 applications tested had no review process completed. Cause: District personnel did not review applications after the initial eligibility determination. Effect: Lack of control to ensure proper classification of student participating in the child nutrition cluster programs, could result in improper classifications and errors in meal count reports. This could ultimately result in questioned costs. Repeat Finding: No. Recommendation: We recommend the District implement controls to ensure all applications are reviewed to ensure the students participating in the child nutrition cluster programs are classified correctly. Views of responsible official: There is no disagreement with the finding.

Federal agency: U.S. Department of Agriculture Federal program title: Child Nutrition Cluster CFDA Number: 10.553, 10.555, 10.556, and 10.559 Pass-Through Agency: Minnesota Department of Education Pass-Through Number(s): 1-001-000 Award Period: June 30, 2019 Type of Finding: ? Material Weakness in Internal control over compliance Criteria or specific requirement: Procurement standards require a policy in place to be followed to ensure entities are properly procuring goods and services and to ensure vendors and contractors are not suspended or debarred. Condition: During procurement and suspension and debarment testing it was noted that the District does not have a procurement policy. Questioned costs: Not applicable. Context: Procurement transactions tested had no review to ensure purchases were following procurement requirements or to ensure vendors were not suspended or debarred before entering a contract. Cause: The District has not approved a procurement policy. Effect: Lack of control to procurement transactions are following regulations could result in paying suspended or debarred vendors or contractors. It could also cause the District to be out of compliance with federal requirements over procurement. Repeat Finding: No. Recommendation: We recommend the District approve a procurement policy and implement controls to ensure it is being followed. Views of responsible official: There is no disagreement with the finding