Hamilton R-2 School District

MATERIAL WEAKNESS 2021-002 Monitoring over Federal Awards and Expenditures-Child Nutrition Cluster - Condition: Child nutrition expenditures were not being reported accurately in the Schedule of Expenditures of Federal Awards. Also, monitoring over child nutrition expenditures and their presentation in the Schedule of Expenditures of Federal Awards was not effective. Criteria: Each type of Federal grant funds should be allocated to expenses and tracked separately in the system so that the expenses are distinguishable from other expenses and can be tested for compliance with the grant documents and reported correctly by program and assitance listing in the SEFA. Effect: Risk is present that non-allowable costs could end up being reported as allowable costs for grants and not be detected or reported correctly in the financial statements and schedule of expenditures of federal awards. Recommendation: We recommend that increased monitoring over federal awards funds be implemented and that expenses be checked for compliance and proper reporting in the schedule of expenditures of federal awards. Management Response: The District has corrected the reporting error for child nutrition and is increasing its monitoring responsibilities to meet the needs of federal programs in the future.

SIGNIFICANT DEFICIENCY 2021-003 Identification of Pass-through Entities - Condition: The District failed to initially recognize the State of Missouri as being a pass-through entity of Federal awards for the food service program. Criteria: The District should review all grant funds being received or expended to determine how to properly code so that State and Federal grant expenditures are recorded accurately in their system and on the schedule of expenditures of federal awards. Effect: Risk is present that Federal grant expenditures could be incorrectly coded, and therefore, not included on the schedule of expenditures of Federal awards. Recommendation: We recommend that the District update its process for preparing the schedule of expenditures of Federal awards to include determining which grants are received from pass-though entities. Management Response: The District has corrected the SEFA totals for 2020-2021 to include the pass-through entities previously not included, and will correct its review process going forward.

SIGNIFICANT DEFICIENCY 2021-004 Missing Assistance Listing Numbers Condition: The District did not originally include Assistance Listing Numbers on the Schedule of Expenditures of Federal Awards. Criteria: All Federal awards should be labeled on the Schedule of Expenditures of Federal Awards with the correct Assistance Listing Numbers for proper identification. Effect: Risk is present Federal grant awards could be misidentified due to a missing assistance listing number. Recommendation: We recommend that research be completed to identify each Assistance Listing Number for all grant awards reported on the Schedule of Expenditures of Federal Awards. Management Response: The District has corrected the SEFA for 2020-2021 to include the assistance listing numbers previously not included, and will include them going forward.

SIGNIFICANT DEFICIENCY 2021-005 Reconciliation of SEFA to underlying Financial Statements Condition: Totals initially provided as expenditures on the schedule of expenditures of Federal awards were not reconciled to the grants shows on the Annual Secretary of the Board Report which tie to the financial statements. Criteria: All supplementary information should be able to be reconciled to the basic financial statements. Effect: Risk is present that errors or irregularities in amounts on the SEFA could not be prevented or detected in a timely manner and corrected before submission of the SEFA with the annual report. Recommendation: We recommend that totals coded as Federal expenditures be analyzed and compared to the financial statement totals for accuracy and reasonableness. Management Response: The District corrected the totals for the 2020-2021 SEFA, and now better understands the Single Audit process, and will carefully review Federal expenditures going forward.