Davenport Community School District

U.S. Department of Agriculture Pass-Through Iowa Department of Education Child Nutrition Cluster Programs: 10.553 School Breakfast Program 10.555 National School Lunch Program 10.555 National School Lunch Program-Supply Chain Assistance 10.555 Commodities -DOD (Noncash) 10.555 Commodities (Noncash) 10.559 Summer Food Service Program for Children 10.582 Fresh Fruit and Vegetable Program Federal Award Year: 2025 Finding: The District overcharged indirect costs to the Child Nutrition program. Criteria: The 2 Code of Federal Regulation (CFR) Part 200, Subpart E provides guidance on the provisions of indirect costs. Indirect cost rates are applied to modified total direct costs (MTDC). 2 CFR 200 defines MTDC as: All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs. Condition: The District applied the indirect cost rate to an estimated modified total direct cost allocation base that was significantly higher than the actual modified total direct cost allocation base. Cause: The District prepared a calculation using an estimate based on the prior fiscal year June expenditures in order to have a transfer amount approved by the Board prior to year-end. Effect: The District could overcharge federal awards for indirect costs. Questioned costs: The District overcharged the program approximately $49,000 computed by applying the unrestricted indirect cost rate provided by the Iowa Department of Education to an estimated modified total direct cost allocation base. Context: The overcharge represents approximately 0.9 percent of the program modified total direct cost allocation base and approximately 0.5 percent of the total program expenditures on the Schedule of Expenditures of Federal Awards. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District annually prepare the indirect cost worksheet based on the actual fiscal year trial balance to compute the modified total direct cost allocation base for all federal awards to apply indirect cost rates.

U.S. Department of Agriculture Pass-Through Iowa Department of Education Child Nutrition Cluster Programs: 10.553 School Breakfast Program 10.555 National School Lunch Program 10.555 National School Lunch Program-Supply Chain Assistance 10.555 Commodities -DOD (Noncash) 10.555 Commodities (Noncash) 10.559 Summer Food Service Program for Children 10.582 Fresh Fruit and Vegetable Program Federal Award Year: 2024 Finding: The District overcharged indirect costs to the Child Nutrition program. Criteria: The 2 Code of Federal Regulation (CFR) Part 200, Subpart E provides guidance on the provisions of indirect costs. Indirect cost rates are applied to modified total direct costs (MTDC). 2 CFR 200 defines MTDC as: All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs. Condition: The District applied the indirect cost rate to an estimated modified total direct cost allocation base that was significantly higher than the actual modified total direct cost allocation base. Cause: The District prepared a calculation using an estimate based on the prior fiscal year June expenditures in order to have a transfer amount approved by the Board prior to year-end. Effect: The District could overcharge federal awards for indirect costs. Questioned costs: The District overcharged the program approximately $49,000 computed by applying the unrestricted indirect cost rate provided by the Iowa Department of Education to an estimated modified total direct cost allocation base. Context: The overcharge represents approximately 0.9 percent of the program modified total direct cost allocation base and approximately 0.5 percent of the total program expenditures on the Schedule of Expenditures of Federal Awards. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District annually prepare the indirect cost worksheet based on the actual fiscal year trial balance to compute the modified total direct cost allocation base for all federal awards to apply indirect cost rates.

U.S. Department of Education, Pass-Through Iowa Department of Education, Education Stabilization Fund: COVID-19 Elementary and Secondary School Emergency Relief (ESSER II) Fund; COVID-19 Governor’s Emergency Education Relief (GEER II) Fund; COVID-19 ARP-Elementary and Secondary School Emergency Relief (ARP ESSER); COVID-19 ARP-Elementary and Secondary School Emergency Relief-Homeless Children and Youth (ARP-HCY). Finding: The District does not have a process for monitoring compliance with pre-approval requests under the Education Stabilization Fund program for capital equipment. Criteria: Consistent with 2 CFR section 200.313 (equipment), Education Stabilization Funds (ESF) may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by Education Department (ED) or the pass-through entity. In addition, with prior approval by the ED or the pass-through entity, recipients and subrecipients may also use ESF funds to purchase real property, perform construction or minor remodeling, and for improvements to land, buildings, or equipment that meet the overall purpose of the ESF program, which is "to prevent, prepare for, and respond to" the COVID-19 pandemic. Condition: The District expended Education Stabilization Fund program funding to purchase weight room equipment at a price above the amount approved by the Iowa Department of Education. Cause: The District did not compare the actual cost of the weight room equipment to the Iowa Department of Education approval. Effect: The District overspent allowable funds as approved by the Iowa Department of Education for equipment by $16,707.62. Context: The District obtained approval to buy weight room equipment for the three high schools in the amount of $158,400. The District purchased items totaling $175,107.62 which exceeded the maximum approved amount and charged the program for the full purchase price. Identification as a repeat finding: This is a repeat finding. Recommendation: We recommend the District implement a system to compare actual costs charged to the program to preapproval amounts and request an amendment if the actual cost exceeds the prior approval limits or only charge the program for the approved portion. Response and Corrective Action Plan: The District will review current processes for purchasing equipment within Iowa Department of Education approval amounts or seek amendments when approval cost limits cannot be met.

U.S. Department of Education Pass-Through Iowa Department of Education Education Stabilization Fund: COVID-19 Elementary and Secondary School Emergency Relief (ESSER II) Fund; COVID-19 Governor’s Emergency Education Relief (GEER II) Fund; COVID-19 ARP-Elementary and Secondary School Emergency Relief (ARP ESSER); COVID-19 ARP-Elementary and Secondary School Emergency Relief-Homeless Children and Youth (ARP-HCY); Finding: The District overcharged indirect costs to the Education Stabilization Fund program. Criteria: The 2 Code of Federal Regulation (CFR) Part 200, Subpart E provides guidance on the provisions of indirect costs. Indirect cost rates are applied to modified total direct costs (MTDC). 2 CFR 200 defines MTDC as: All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs. Condition: The District did not apply the indirect cost rate to the correct modified total direct cost allocation base. The District applied the indirect cost rate to total expenditures of the ESSER II award of the Education Stabilization Fund without first reducing the allocation base by the total indirect costs already included and by the capital outlay object expenditure amounts. Cause: The District does not prepare a calculation of the modified program direct costs before applying the indirect cost rate. Effect: The District could overcharge federal awards for indirect costs. Questioned costs: The District overcharged the program $94,605 computed by applying the unrestricted indirect cost rate provided by the Iowa Department of Education to the modified total direct cost allocation base which excluded the indirect cost journal entry posted by the District and capital outlay object expenditure amounts. Context: The overcharge represents approximately 1 percent of the ESSER II award modified total direct cost allocation base and approximately 0.5 percent of the total Education Stabilization Fund program modified total direct cost allocation base. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District annually prepare an indirect cost worksheet to compute the modified total direct cost allocation base for all federal awards to apply indirect cost rates. Response and Corrective Action Plan: The District will annually prepare a calculation of the modified total direct cost allocation base for all federal awards before applying the indirect cost rate to federal programs.

Finding: The District has insufficient reconciling and monitoring activities over the School Nutrition Fund charges for services. Criteria: A properly designed system of internal control over financial reporting allows entities to initiate, authorize, record, process and report financial data reliably in accordance with generally accepted accounting principles (GAAP). The Office of Management and Budget 2022 Compliance Supplement states, ?An SFA is required to account for all revenues and expenditures of its non-profit school food service in accordance with state requirements. An SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services (7 CFR sections 210.14(a), 210.14(c), 210.19(a)(2), 215.7(d)(1), 220.2, and 220.7(e)(1)(i)).? Condition: The District does not have routine reconciliation and monitoring processes to ensure the District?s School Nutrition has properly recorded charges for services. The District does not reconcile the charges for services recorded in the District?s trial balance to the District?s subsidiary point of sale system and other sales that are not included in the point of sale system. Context: The District?s point of sale system and meal sales had an unreconciled difference of approximately $27,000. During the audit process, the District was requested by the audit team to investigate the difference. The District subsequently identified approximately $12,000 of vendor rebates that are separate from the point of sale process resulting in approximately $15,000 not identified. Effect: Revenue collected by the District for the Child Nutrition Program may not be posted to the proper fund. Errors could occur in reporting revenue and not be timely identified. Identification as a repeat finding: This is a repeat finding. Cause: The Food and Nutrition Services Department point of sale report for revenue from items sold does not reconcile to the Finance Department held trial balance of revenue accounts. A portion of the difference is vendor rebates recorded in revenue trial balance accounts. The remaining difference is unidentified. A process must be developed to ensure the operations of the Food and Nutrition Services Department are properly recorded in the District?s revenue trial balance accounts.Recommendation: We recommend the District continue to implement new processes in which reconciling the financial information of both departments is an assigned job duty to ensure the financial transactions are reconciled and monitored on a routine basis throughout the fiscal year.

Finding: The District does not have a process to ensure compliance with reporting requirements within the federal program. Criteria: The April 2022 Office of Management and Budget Compliance Supplement states the following for Compliance Requirements-Reporting and Recordkeeping: ?Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed?? Condition: The District does not have a process to review monthly data used in computing meal reimbursement claims. The District does not have documentation readily available that was used in computing monthly reimbursement claim reports. Context: The District reported 169,281 lunch meals and 73,297 breakfast meals, but supporting documentation showed 169,105 lunch meals (176 less) and 73,890 (593 more) for February 2022. Effect: The District does not have adequate documentation to ensure compliance with federal requirements regarding reporting and recordkeeping. The District could incorrectly report meal counts. Identification as a Repeat Finding: This is not a repeat finding. Cause: The District does not monitor compliance reporting and recordkeeping rules as established by the Iowa Department of Education and the Office of Management and Budget. Recommendation: We recommend the District implement a process to review monthly claim reporting and to retain records used in meal count reporting for the required period of time.

Finding: The District overcharged the Education Stabilization Fund program for equipment. Criteria: Consistent with 2 CFR section 200.313 (equipment), Education Stabilization Funds (ESF) may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by Education Department (ED) or the pass-through entity. In addition, with prior approval by the ED or the pass-through entity, recipients and subrecipients may also use ESF funds to purchase real property, perform construction or minor remodeling, and for improvements to land, buildings, or equipment that meet the overall purpose of the ESF program, which is ?to prevent, prepare for, and respond to? the COVID-19 pandemic. Condition: The District expended Education Stabilization Fund program funding to purchase three vehicles at a price above the amount approved by the Iowa Department of Education. Context: The District obtained approval to buy up to eight vehicles for up to $40,000 each. The District purchased three vehicles in the amounts of $55,348; $48,351, and $54,214, which exceeded the maximum approved amount per vehicle and charged the program for the full purchase price. Effect: The District overspent allowable funds as approved by the Iowa Department of Education for equipment by $37,913. Questioned Costs: $37,913 Identification as a repeat finding: This is not a repeat finding. Cause: The District did not compare the actual cost of each vehicle to the Iowa Department of Education approval. Recommendation: We recommend the District request an amendment if the actual cost exceeds the prior approval limits or only charge the program for the approved portion.

Finding: The District improperly awarded a retention bonus to an ineligible employee. Criteria: When the U.S. Department of Education (ED) awarded ESSER I, II and III funds to states it noted the funds ?generally will not be used for bonuses, merit pay, or similar expenditures, unless related to disruptions or closures resulting from COVID-19.? This does not mean all bonuses, merit pay, or similar expenditures are unallowable, only those unrelated to COVID-related disruptions or closures. For example, a local educational agency (LEA) might use local ESSER funds to provide employees with additional pay to: ? Address recruitment or retention challenges in light of the pandemic, ? Provide additional compensation to teachers and other staff that work inperson, ? Provide additional compensation to teachers and other staff that have assumed new duties because of COVID, ? Incentivize effective teachers to move to schools with vulnerable students ? that have been disproportionately impacted by the pandemic, or ? Provide additional pay to substitute teachers where there is a shortage. Districts will also need to be able to document that use of ESSER I/II/III funds for this purpose is necessary and the amount provided is reasonable (2 CFR ? 200.404). The District policy for awarding retention bonuses required the employee to be employed by the District as of February 14, 2022. Condition: The District used Education Stabilization Fund ESSER II to fund retention bonuses. The District awarded a retention bonus to an employee hired after the February 14, 2022 eligibility date. Context: The District awarded $1,300 to an employee hired after the eligibility date. Effect: Education Stabilization Funds could be expended for ineligible purposes. Questioned Costs: $1,300. Identification as a repeat finding: This is not a repeat finding. Cause: The District did not review the bonus listing and hire dates to ensure only eligible employees received the retention bonus. Recommendation: We recommend the District implement policies and procedures to ensure that retention bonuses are only paid to eligible employees.

Finding: The District could not provide documentation of compliance for test security measures. Criteria: The Office of Management and Budget Compliance Supplement for Title 1, Part A requires local education agencies to have policies and procedures for ensuring the schools implement test security measures. Condition: The District was unable to provide documentation of policies and procedures for fiscal year 2022 for ensuring the District schools implemented test security measures and was unable to provide documentation test security measures were implemented and enforced. Therefore, the compliance requirement could not be audited. Context: No documentation was provided for the special test and provision over test security measures for fiscal year 2022. The District testing protocol documentation was prepared in October 2022. Effect: The District is not in compliance with the Title 1 requirements for test security measures for fiscal year 2022. Questioned Costs: $0 Identification as a repeat finding: This is a repeat finding. Cause: The District does not maintain sufficient documentation for program requirements that are not expenditure based. The District does not have a centralized grant manager ensuring compliance with all requirements of the federal programs. Recommendation: We recommend the District require all federal program requirements be assigned to a grant manager to ensure compliance.

2021-005 U.S. Department of Education Pass-Through Iowa Department of Education Education Stabilization Fund 84.425C COVID-19 Governor?s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Elementary and Secondary School Emergency Relief (ESSER) Fund Federal Award Year: 2021 Finding: The District has insufficient monitoring internal control procedures over allowable costs charged to federal programs. Criteria: 2 CFR 200.1 defines internal control over compliance requirements for federal awards as the following: Internal controls for non-Federal entities means: (1) Processes designed and implemented by non- Federal entities to provide reasonable assurance regarding the achievement of objectives in the following categories: (i) Effectiveness and efficiency of operations; (ii) Reliability of reporting for internal and external use; and (iii) Compliance with applicable laws and regulations. 2 CFR 300.303 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards.(d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non- Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. Condition: The District does not formally review and reconcile the transactions charged to the programs for proper recording and reporting to the federal award from the District?s general ledger systems. Information such as payroll and benefit costs are pulled from the subsidiary system and manipulated into journal entry transactions or are modified from the original documentation, charged to the program, and reported to the state without monitoring procedures to ensure the information is accurate and substantiated. System reports do not agree to the charges to the District program. Context: Salaries and wages and benefits charged to the program were approximately $3.4 million. This represents 49 percent of total expenditures of the program. An entry was incorrectly posted to the program for $1,075,312 rather than $546,268. Effect: Errors could occur within allowable costs charged to federal programs without being timely identified. Identification as a repeat finding: This is a repeat finding. Cause: The District does not have proper review and monitoring procedures over federal awards. Recommendation: We recommend the District implement review and monitoring

2021-006 U.S. Department of Agriculture Pass-Through Iowa Department of Education Child Nutrition Cluster Program: 10.553 School Breakfast Program 10.555 National School Lunch Program 10.555 COVID-19 USDA Child Nutrition Program CARES Grants To States 10.555 Commodities-Department of Defense 10.555 Commodities 10.559 Summer Food Service Program For Children Federal Award Year: 2021, 2020 Finding: The District has insufficient reconciling and monitoring activities over the School Nutrition Fund charges for services. Criteria: A properly designed system of internal control over financial reporting allows entities to initiate, authorize, record, process and report financial data reliably in accordance with generally accepted accounting principles (GAAP). The Office of Management and Budget 2021 ComplianceSupplement states, ?An SFA is required to account for all revenues and expenditures of its non-profit school food service in accordance with state requirements. An SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services (7 CFR sections 210.14(a), 210.14(c), 210.19(a)(2), 215.7(d)(1), 220.2, and 220.7(e)(1)(i)).? Condition: The District does not have routine reconciliation and monitoring processes to ensure the District?s School Nutrition has properly recorded charges for services. The District does not reconcile the charges for services recorded in the District?s trial balance to the District?s subsidiary point of sale system and other sales that are not included in the point of sale system. Context: The District?s point of sale system and meal sales had an unreconciled difference of approximately $43,000. During the audit process, the District was requested by the audit team to investigate the difference. The District subsequently identified approximately $24,000 of sales that are separate from the point of sale process resulting in approximately $19,000 not identified. Effect: Revenue collected by the District for the Child Nutrition Program may not be posted to the proper fund. Errors could occur in reporting revenue and not be timely identified. Identification as a repeat finding: This is a repeat finding. Cause: The Food & Nutrition Services Department and the Finance Department operate within separate environments and separate buildings and have not created streamlined processes to ensure the operations and resulting financial transactions of the Food & Nutrition Services Department activities are properly recorded and reported within the trial balance maintained by the Finance Department. The job duty of ensuring the financial information of both departments is reconciled has not been specifically assigned. Recommendation: We recommend the District implement new processes in which reconciling the financial information of both departments is an assigned job duty to ensure the financial transactions are reconciled and monitored on a routine basis throughout the fiscal year. Response and Corrective Action Plan: The District will review current processes to routinely reconcile the point of sale system and the general ledger.

2021-007 U.S. Department of Education Pass-Through Iowa Department of Education Education Stabilization Fund 84.425C COVID-19 Governor?s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Elementary and Secondary School Emergency Relief (ESSER) Fund Federal Award Year: 2021 Finding: The District charged the program for unallowable costs. Criteria: Per 2 CFR Part 200, Subpart E costs must: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. Condition: The following noncompliance was identified: ? The District overcharged the program $529,043 for COVID-19 leave costs. ? The District charged the program for a vacation and sick leave payout for deceased employees which is not an allowable cost of the program. ? The District could not provide COVID-19 leave documentation for payroll costs charged to the program for COVID-19 leave costs. Cause: The District does not have proper review and monitoring procedures over federal awards. The District will record journal entries to federal programs without having appropriate review and reconciling procedures by supervisory personnel. The District does not have an adequate documentation process for allowable costs charged to the program. The District will make wholesale journal entries of payroll and benefits without considering there may be costs not allowed to be charged to the program. Effect: Errors could occur within allowable costs charged to federal programs without being timely identified. Questioned Costs: Known questioned costs are $540,046. The incorrect journal entry was $529,043. The vacation and sick leave payout and the undocumented COVID-19 leave costs were $11,003. Context: Unallowable costs identified represent 37 percent of the total payroll sample selected for testing. Total payroll costs charged to the program were approximately $3.4 million. Identification as a repeat finding: This is not a repeat finding.Recommendation: We recommend the District discontinue charging the program based on wholesale journal entries. We recommend the District discontinue maintaining leave documentation separate from payroll processing. We recommend the District invest in appropriately coding COVID-19 costs to unique project codes in the general ledger as incurred and within the payroll process procedures. Time should be directly recorded to a program project account. Response and Corrective Action Plan: The District will review current processes and realign procedures to ensure compliance with program requirements.

2021-008 U.S. Department of Education Pass-Through Iowa Department of Education 84.010 Title 1 Grants to Local Education Agencies Federal Award Year: 2021 Finding: The District could not provide documentation of compliance for test security measures. Criteria: The Office of Management and Budget Compliance Supplement for Title 1, Part A requires local education agencies to have policies and procedures for ensuring the schools implement test security measures. Condition: The District was unable to provide documentation of policies and procedures for ensuring the District schools implemented test security measures and was unable to provide documentation test security measures were implemented and enforced. Therefore, the compliance requirement could not be audited. Cause: The District does not maintain sufficient documentation for program requirements that are not expenditure based. The District does not have a centralized grant manager ensuring compliance with all requirements of the federal programs. Effect: The District is not in compliance with the Title 1 requirements for test security measures. Questioned Costs: $0 Context: No documentation was provided for the special test and provision over test security measures. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District require all federal program requirements be assigned to a grant manager to ensure compliance. Response and Corrective Action Plan: The District will review current processes and realign procedures to ensure compliance with program requirements.

Material Weakness: 2020-005 U.S. Department of Education Pass-Through Iowa Department of Education 84.425 Education Stabilization Fund COVID-19 (ESSER) Federal Award Year: 2020 Finding: The District has insufficient monitoring procedures over payroll transactions charged to federal programs. Criteria: A properly designed system of internal control over financial reporting allows entities to initiate, authorize, record, process and report financial data reliably in accordance with generally accepted accounting principles (GAAP). Condition: The following individual conditions collectively rise to a reportable finding:Three timesheets had total hours less than total hours actually paid and charged to the program. There were no documented manager reviews and approvals of employee timesheets. In some instances, due to closure for the pandemic, timesheets were not required; however, no alternative review and approval was implemented for employee payroll. The District has a timeclock system that does not interface with the District?s general ledger. As a result, the Finance Department is manually entering the payroll information of the District from electronic printouts of the timeclock system. Context: Salaries and wages and benefits charged to the program were $1,936,036 for approximately 200 employees. This represents 92 percent of $2,099,875 total expenditures of the program. Effect: Errors could occur within payroll charged to federal programs without being timely identified. Questioned Costs: $0 Identification as a repeat finding: This is not a repeat finding. Cause: The District does not require supervisors to approve payroll prior to processing. Recommendation: We recommend the District implement a culture and expectation that supervisors are to approve their employee payroll to ensure accuracy and accountability. We recommend requiring differences between timesheets from the time clock system and the employee schedule of hours to be paid be reconciled, documented and approved.

Significant Deficiency: 2020-006 U.S. Department of Agriculture Pass-Through Iowa Department of Education Child Nutrition Cluster Program: 10.553 School Breakfast Program 10.555 National School Lunch Program 10.555 USDA Child Nutrition Program CARES Grants To States (COVID-19 SFSP) 10.555 Commodities-Department of Defense 10.555 Commodities 10.559 Summer Food Service Program For Children Federal Award Year: 2020 Finding: The District has insufficient reconciling and monitoring activities over the School Nutrition Fund charges for services. Criteria: A properly designed system of internal control over financial reporting allows entities to initiate, authorize, record, process and report financial data reliably in accordance with generally accepted accounting principles (GAAP). The Office of Management and Budget 2020 Compliance Supplement states, ?An SFA is required to account for all revenues and expenditures of its non-profit school food service in accordance with state requirements. An SFA must operate its food services on a non-profit basis; all revenue generated by the school food service must be used to operate and improve its food services (7 CFR sections 210.14(a), 210.14(c), 210.19(a)(2), 215.7(d)(1), 220.2, and 220.7(e)(1)(i)).? Condition: The District does not have routine reconciliation and monitoring processes to ensure the District?s School Nutrition has properly recorded charges for services and changes in unearned revenue. The District does not reconcile the charges for services recorded in the District?s trial balance to the District?s subsidiary point of sale system and other sales that are not included in the point of sale system. Context: The District?s point of sale system and meal sales had an unreconciled difference of approximately $78,000. During the audit process, the District was requested by the audit team to investigate the difference. The District subsequently identified approximately $65,000 of sales that are separate from the point of sale process resulting in approximately $13,000 not identified. In addition, the District does not routinely reconcile the unearned revenue balance sheet account to the trial balance. Effect: Revenue collected by the District for the Child Nutrition Program may not be posted to the proper fund. Errors could occur in reporting revenue and unearned revenue and not be timely identified. Questioned Costs: $0Identification as a repeat finding: This is not a repeat finding. Cause: The Food & Nutrition Services Department and the Finance Department operate within separate environments and separate buildings and have not created streamlined processes to ensure the operations and resulting financial transactions of the Food & Nutrition Services Department activities are properly recorded and reported within the trial balance maintained by the Finance Department. The job duty of ensuring the financial information of both departments is reconciled has not been specifically assigned. Recommendation: We recommend the District implement new processes in which reconciling the financial information of both departments is an assigned job duty to ensure the financial transactions are reconciled and monitored on a routine basis throughout the fiscal year.