PARSHALL PUBLIC SCHOOL DISTRICT NO. 3

2019-013 IMPACT AID SPENDING ERRORS ? CFDA 84.041 ? MATERIAL WEAKNESS AND MATERIAL NON-COMPLIANCE Condition Parshall Public School District received $74,834 of Section 7003(d) funding for fiscal years 2018 and 2019. These funds are required to be spent to conduct programs or projects for the free, appropriate public education of the federally connected children with disabilities who generated the funds but instead were recorded and spent in the same manner as the basic support payments 7003(b) which are treated as general aid to Parshall Public School District and can be used for current operating expenditures or capital outlays in accordance with State laws. Effect Section 7003(d) - Federally connected children with disabilities funding may have been spent as general aid instead of toward programs or projects for the free, appropriate public education of the federally connected children with disabilities who generated those funds. Cause Parshall Public School District may not have been aware of the spending requirements for funding received under Section 7003(d) - Federally connected children with disabilities. Further, Parshall Public School District does not have procedures in place to ensure funds received under Section 7003(d) are spent to conduct programs or projects for the free, appropriate public education of the federally connected children with disabilities who generated the funds. Criteria 34 CFR 222.53 requires local education agencies (LEAs) to use payments provided under Section 7003(d) - Federally connected children with disabilities, to conduct programs or projects for the free, appropriate public education of the federally connected children with disabilities who generated those funds. "Standards for Internal Control in the Federal Government" (Green Book) requires management to design, implement, and operate internal controls to achieve its objectives related to operations, reporting, and compliance. Management is to design appropriate types of control activities for the entity's internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system. Questioned Costs $74,834 Prior Recommendation No. Recommendation We recommend Parshall Public School District develop procedures to ensure funds received under Section 7003(d) - Federally connected children with disabilities, are being spent to conduct programs or projects for the free, appropriate public education of the federally connected children with disabilities who generated the funds in accordance with 34 CFR 222.53. Parshall Public School District?s Response See Corrective Action Plan

2019-014 IMPACT AID LEVEL OF EFFORT INTERNAL CONTROLS ? CFDA 84.041 ? MATERIAL WEAKNESS Condition Parshall Public School District does not have internal controls in place to ensure Section 7003(d) funds are not used to supplant any State funds (either general or special education State Aid) that were or would have been available to the LEA for the free, appropriate public education of federally connected children with disabilities counted under Section 7003(d). Effect Parshall Public School District may be supplanting State funds which may go undetected by the Parshall Public School District. Cause Parshall Public School District may not have been aware of the level of effort requirement and as a result did not establish procedures to verify compliance. Criteria 34 CFR 222.54 states that funds provided under section 7003(d) may not supplant any State funds that were or would have been available to the local education agency (LEA) for the free appropriate public education of children counted under section 7003(d). "Standards for Internal Control in the Federal Government" (Green Book) requires management to design, implement, and operate internal controls to achieve its objectives related to operations, reporting, and compliance. Management is to design appropriate types of control activities for the entity's internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system. Questioned Costs None. Prior Recommendation No. Recommendation We recommend Parshall Public School District develop internal controls to ensure Section 7003(d) funds are not used to supplant any State funds (either general or special education State aid) that were or would have been available to the LEA for the free, appropriate public education of federally connected children with disabilities counted under Section 7003(d). Parshall Public School District?s Response See Corrective Action Plan

2019-015 IMPACT AID REPORTING INTERNAL CONTROLS ? CFDA 84.041 ? MATERIAL WEAKNESS Condition Parshall Public School District does not have internal controls established to ensure annual Impact Aid applications are accurate. The Superintendent obtains support to prepare the application and once completed submits the application to the Department of Education. No independent review of the application is performed to help ensure all amounts in the report are accurate and agree to support. Effect Parshall Public School District may have improperly reported application information, affecting Impact Aid Grant allocations to Parshall Public School District. Cause Parshall Public School District does not have adequate policies and procedures to review the application for the Impact Aid Grant prior to submission. Criteria "Standards for Internal Control in the Federal Government" (Green Book) requires management to design, implement, and operate internal controls to achieve its objectives related to operations, reporting, and compliance. Management is to design appropriate types of control activities for the entity's internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system. Questioned Costs None. Prior Recommendation No. Recommendation We recommend Parshall Public School District implement policies and procedures to ensure Impact Aid Grant applications are reviewed by someone other than the preparer, prior to submission to ensure accuracy. Parshall Public School District?s Response See Corrective Action Plan

2019-016 IMPACT AID APPLICATION ? CFDA 84.041 ? MATERIAL WEAKNESS AND MATERIAL NON-COMPLIANCE Condition Parshall Public School District incorrectly reported the number of Federally connected children on tables 1,3, and 5 of the Impact Aid grant application. ? Parshall Public School District reported 33 children in table 1 but should have only reported 17. The school erroneously included children with disabilities that did not reside on eligible federal property or eligible Indian lands. ? Parshall Public School District reported 109 students in table 3. The school district had 110 students who resided on eligible Indian lands but 17 of those students should have been reported in table 1. As a result, the School District should have only reported 93 students in table 3. ? Parshall Public School District reported 33 students in table 5. The total number of Federally connected children attending the School District for school year 2017-2018 was 178. Table 1 should have reported 17 students with disabilities, table 3 should have reported 93 students living on eligible Indian lands, and table 5 should have reported the remaining 68 students who reside with a parent employed on federal property. Effect Funding received by Parshall Public School District was based on incorrect information included in the Impact Aid grant application, likely causing incorrect funding to be received from the U.S. Department of Education. Cause Supporting documentation maintained by Parshall Public School District did not match the amounts included in the Impact Aid grant application. Criteria The application for Impact Aid - Section 7003 (OMB No. 1810-0687) instructions include the following: ? Table 1 should include the children with disabilities who reside on eligible federal property or who reside on eligible Indian lands. ? Table 3 should include: (1) children who reside on federal property with a parent employed on eligible federal property located at least partly within the school district; or (2) reside on eligible federal property and have a parent on active duty in the uniformed services of the United States; or (3) reside on eligible federal property and have a parent who is both an accredited foreign government official and a foreign military officer; or (4) reside on eligible Indian lands (no parental employment required) This table does not include the children reported in table 1. ? Table 5 should include children who do not reside on federal property but: (1) reside with a parent employed on federal property; or (2) have a parent on active duty in the uniformed services of the United States; or (3) have a parent who is both an accredited foreign government official and a foreign military officer. Questioned Costs None. Prior Recommendation No. Recommendation We recommend Parshall Public School District maintain supporting documentation to ensure all Impact Aid grant applications include the proper number of Federally connected children. Parshall Public School District?s Response See Corrective Action Plan

2019-017 IMPACT AID REQUIRED LEVEL OF EXPENDITURE ? CFDA 84.041 ? MATERIAL WEAKNESS Condition Parshall Public School District does not have internal controls in place to ensure the required level of expenditure for Federally connected children requirement is met related to Section 7003(d) funding. Effect Parshall Public School District may not be providing the required services to Federally connected children with disabilities. Cause Parshall Public School District was not aware of the extra requirements related to Section 7003(d) funding received and therefore did not implement internal controls to ensure compliance with the Federal regulations. Criteria 34 CFR 222.53 states that for each fiscal year, the amount of expenditures for special education and related services provided to Federally connected children with disabilities must be at least equal to the amount of funds received and credited under Section 7003(d) of the Elementary and Secondary Education Act (ESEA). "Standards for Internal Control in the Federal Government" (Green Book) requires management to design, implement, and operate internal controls to achieve its objectives related to operations, reporting, and compliance. Management is to design appropriate types of control activities for the entity's internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system. Questioned Costs None. Prior Recommendation No. Recommendation We recommend Parshall Public School District develop internal controls and implement procedures to ensure the required level of expenditure for Federally connected children requirement is met. Parshall Public School District?s Response See Corrective Action Plan