FORT YATES PUBLIC SCHOOL DISTRICT NO 4

Criteria Uniform Guidance 2 CFR 200.512(a) states in part: “The audit must be completed, and the data collection form must be submitted within the earlier of 30 calendar days after receipt of the auditor's report or nine months after the end of the audit period.” Condition The District did not submit its Data Collection Form to the Federal Audit Clearinghouse within nine months of its year-end. Cause Audited financial statements were not complete; therefore, the Data Collection Form could not be filed timely. Effect The District is not in compliance with the filing requirement deadline. Recommendation We recommend the District comply with the Uniform Guidance 2 CFR 200.512(a) by submitting the Data Collection Form within the allowable time requirements. Views of Responsible Officials and Planned Corrective Actions Management is in agreement with the finding. See attached Corrective Action Plan. Indication of Repeat Finding This is a new finding.

Criteria The District should charge costs to the grants that are allowable. Documentation should be kept that supports the employees are being paid the correct amounts based on approved rates to ensure only approved amounts are charged to the grant. Condition Of the 35 payroll transactions tested, we noted 35 instances where proper support was not kept to support the amount charged to the grant. Questioned Costs $29,169 Cause The District did not have proper support to show how payroll was allocated to each grant. Effect Grant awards potentially overcharged. Recommendation We recommend the District implement policies and procedures that help determine how payroll is allocated to each grant. Views of Responsible Officials and Planned Corrective Actions Management is in agreement with the finding. See attached Corrective Action Plan. Indication of Repeat Finding This is a repeat finding of 2021-005.

Criteria The District should charge costs to the grants that are allowable. Documentation should be kept that supports the employees are being paid the correct amounts based on approved rates to ensure only approved amounts are charged to the grant. Condition Of the 24 payroll transactions tested, we noted 24 instances where proper support was not kept to support the amount charged to the grant. Questioned Costs $10,204 Cause The District did not have proper support to show how payroll was allocated to each grant. Effect Grant awards potentially overcharged. Recommendation We recommend the District implement policies and procedures that help determine how payroll is allocated to each grant. Views of Responsible Officials and Planned Corrective Actions Management is in agreement with the finding. See attached Corrective Action Plan. Indication of Repeat Finding This is a repeat finding of 2021-005.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Questioned Costs: None Condition and Cause: The District has not segregated all accounting duties (to include duties specifically related to compliance requirements of federal funding) to ensure that no one person is involved in more than one of the accounting and reporting processes of authorization, execution, custody, and recording for any given transaction. The District has limited oversight over accounting or compliance with funding sources. The District has limited staff available to fully segregate all duties. No written policies exist for data security, internet and mobile device use, or contingency plan. Backups are not performed on the accounting data. Criteria and Effect: All good systems of internal accounting control include adequate segregation of duties so no one individual handles a transaction from its inception to its completion. Employees whose responsibilities encompass two or more phases of a transaction increase the risk of undetected errors, omissions, or misappropriation of assets of the District. Adequate oversight should be included in the internal control processes. Information technology policies and controls help safeguard the District from electronic threats, and backups provide the District with the ability to maintain records in the event of a disaster. A lack of information technology policies and backups could cause the District to lose data. Repeat Finding from Prior Year: Yes, prior year finding 2020-001 Recommendation: We recommend the District evaluate the internal controls in the accounting and reporting process to determine if additional segregation of duties is feasible or if additional mitigating controls can be implemented, including oversight by management or the board. We also recommend the District prepare and communicate policies for data security, internet and mobile device use, and a contingency plan. A backup policy should also be prepared and implemented to ensure accounting data is maintained. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Reporting Questioned Costs: None Condition and Cause: We were requested to draft the audited financial statements and the SEFA, and related footnote disclosures as part of our regular audit services. Ultimately, it is management?s responsibility to provide for the preparation of the District?s statements and footnotes, and the responsibility of the auditor to determine the fairness of presentation of those statements. From a practical standpoint, we do both for the District at the same time in connection with our audit. This is not unusual for us to do with organizations of the District?s size. Criteria and Effect: It is our responsibility to inform the School Board that this deficiency could result in a material misstatement to the financial statements that would have not been prevented or detected by the District?s management. Repeat Finding from Prior Year: Yes, prior year finding 2020-002 Recommendation: We have instructed management to review a draft of the auditor prepared financials in detail for their accuracy; we have answered any questions they might have, and have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in the District?s financial statements. We are satisfied that the appropriate steps have been taken to provide the District with the completed financial statements. It is the responsibility of management and the School Board to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Questioned Costs: None Condition and Cause: We identified misstatements in the District?s financial statements causing us to propose material audit adjustments. The District did not reconcile accounts to subsidiary schedules or complete year-end adjustments to reflect accurate balances. Criteria and Effect: A good system of internal accounting control includes proper reconciliation of all general ledger accounts and adjustment of those accounts to the proper balances. Inadequate internal controls over recording of transactions affect the District?s ability to detect misstatements in amounts that could be material to the financial statements. Repeat Finding from Prior Year: Yes, prior year finding 2020-003 Recommendation: We recommend the District reconcile all general ledger accounts and adjust the accounts to the proper balances in a timely manner. Response/Corrective Action Plan: Management is in agreement with the finding. See attached Corrective Action Plan.

Federal Programs Affected: Title I (CFDA # 84.010) Compliance Requirement: Allowable Costs Questioned Costs: None over $25,000. Condition and Cause: We noted the following errors during our sample testing of 25 payroll transactions. Errors noted were due to lack of supporting documentation: a. Gross pay could not be recalculated for 1 certified and 10 noncertified employees as the School does not maintain signed contracts and approved pay rates. Additionally, 1 noncertified employee was being paid a rate other than the approved rate on their signed contract. b. One employee tested was not making and receiving the required TFFR contributions. The error was identified subsequent to year end and required TFFR contributions were made. c. Documentation could not be provided for one expense tested. Criteria and Effect: Uniform Guidance requires expenditures to follow the allowable costs as outlined in the grant agreements and also requires adequate documentation of all federal disbursements. For non-federal disbursements, accounting standards require substantiating documentation to be maintained to support the business reasonableness of all expenditures. Lack of adequate documentation could result in questioned costs or misappropriation of District funds. TFFR assesses employees and employers participating in the plan. Such percentages are not consistently applied by the District. Repeat Finding from Prior Year: Yes, prior year finding 2020-005 Recommendation: Control processes regarding recordkeeping and maintenance of substantiating documentation should be maintained and reviewed to ensure documentation is being kept as evidence of the propriety of the expenditure. Review of expenditures should be documented on the expenditure documentation. The District should work with TFFR to determine retirement contributions are completed properly. Response/Corrective Action Plan: Management is in agreement with the finding. See attached Corrective Action Plan.

Federal Program Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Allowable Costs/Cost Principles, Cash Management, and Special Reporting Questioned Costs: None Condition and Cause: The District does not have written policies for allowable costs/cost principles and cash management. The District understated the total students provided education reported on its impact aid application by two students. Criteria and Effect: Uniform Guidance specifically requires entities to maintain written policies for allowable costs/cost principles and cash management. The District?s impact aid application should be supported by student counts and the application should be reviewed for errors. Not properly maintaining such policies and review procedures leads to noncompliance and potential unallowable costs. Repeat Finding from Prior Year: Yes, 2020-006 modified. Recommendation: The District should create written policies for allowable costs/cost principles and cash management and maintain adequate documentation supporting its Impact Aid application. Someone should review the Impact Aid application. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Questioned Costs: None Condition and Cause: The District has not segregated all accounting duties (to include duties specifically related to compliance requirements of federal funding) to ensure that no one person is involved in more than one of the accounting and reporting processes of authorization, execution, custody, and recording for any given transaction. The District has limited oversight over accounting or compliance with funding sources. The District has limited staff available to fully segregate all duties. No written policies exist for data security, internet and mobile device use, or contingency plan. Backups are not performed on the accounting data. Criteria and Effect: All good systems of internal accounting control include adequate segregation of duties so no one individual handles a transaction from its inception to its completion. Employees whose responsibilities encompass two or more phases of a transaction increase the risk of undetected errors, omissions, or misappropriation of assets of the District. Adequate oversight should be included in the internal control processes. Information technology policies and controls help safeguard the District from electronic threats, and backups provide the District with the ability to maintain records in the event of a disaster. A lack of information technology policies and backups could cause the District to lose data. Repeat Finding from Prior Year: Yes, prior year finding 2019-001 Recommendation: We recommend the District evaluate the internal controls in the accounting and reporting process to determine if additional segregation of duties is feasible or if additional mitigating controls can be implemented, including oversight by management or the board. We also recommend the District prepare and communicate policies for data security, internet and mobile device use, and a contingency plan. A backup policy should also be prepared and implemented to ensure accounting data is maintained. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Reporting Questioned Costs: None Condition and Cause: We were requested to draft the audited financial statements and the SEFA, and related footnote disclosures as part of our regular audit services. Ultimately, it is management?s responsibility to provide for the preparation of the District?s statements and footnotes, and the responsibility of the auditor to determine the fairness of presentation of those statements. From a practical standpoint, we do both for the District at the same time in connection with our audit. This is not unusual for us to do with organizations of the District?s size. Criteria and Effect: It is our responsibility to inform the School Board that this deficiency could result in a material misstatement to the financial statements that would have not been prevented or detected by the District?s management. Repeat Finding from Prior Year: Yes, prior year finding 2019-002 Recommendation: We have instructed management to review a draft of the auditor prepared financials in detail for their accuracy; we have answered any questions they might have, and have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in the District?s financial statements. We are satisfied that the appropriate steps have been taken to provide the District with the completed financial statements. It is the responsibility of management and the School Board to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Questioned Costs: None Condition and Cause: We identified misstatements in the District?s financial statements causing us to propose material audit adjustments. The District did not reconcile accounts to subsidiary schedules or complete year-end adjustments to reflect accurate balances. We also proposed an entry to record accounts payable for the purchase of a bus. Criteria and Effect: A good system of internal accounting control includes proper reconciliation of all general ledger accounts and adjustment of those accounts to the proper balances. Inadequate internal controls over recording of transactions affect the District?s ability to detect misstatements in amounts that could be material to the financial statements. Repeat Finding from Prior Year: Yes, prior year finding 2019-003 Recommendation: We recommend the District reconcile all general ledger accounts and adjust the accounts to the proper balances in a timely manner. Response/Corrective Action Plan: Management is in agreement with the finding. See attached Corrective Action Plan.

Federal Programs Affected: Title I (CFDA # 84.010), Indian Education (CFDA # 84.060A), and Special Education (CFDA # 84.173) Compliance Requirement: Allowable Costs Questioned Costs: Program Title I - Indian Education - Special Education Preschool Grants - 84.010 84.060A 84.173 Total Known Questioned Costs 12,973 1,265 1,882 Amount Tested 14,611 1,265 1,882 Payroll Federal Expenditures 318,265 32,943 31,710 Condition and Cause: We noted the following errors during our sample testing of 60 payroll transactions. Errors noted were due to lack of supporting documentation: a. Gross pay could not be recalculated for 33 noncertified employees as the School does not maintain signed contracts and approved pay rates. b. Two employees tested were not receiving the required 24.5% TFFR contribution. Criteria and Effect: Uniform Guidance requires expenditures to follow the allowable costs as outlined in the grant agreements and also requires adequate documentation of all federal disbursements. For non-federal disbursements, accounting standards require substantiating documentation to be maintained to support the business reasonableness of all expenditures. Lack of adequate documentation could result in questioned costs or misappropriation of District funds. TFFR assesses employees and employers participating in the plan. Such percentages are not consistently applied by the District. Repeat Finding from Prior Year: Yes, prior year finding 2019-005 Recommendation: Control processes regarding recordkeeping and maintenance of substantiating documentation should be maintained and reviewed to ensure documentation is being kept as evidence of the propriety of the expenditure. Review of expenditures should be documented on the expenditure documentation. The District should work with TFFR to determine retirement contributions are completed properly. Response/Corrective Action Plan: Management is in agreement with the finding. See attached Corrective Action Plan.

Federal Program Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Allowable Costs/Cost Principles, Cash Management, and Special Reporting Questioned Costs: None Condition and Cause: The District does not have written policies for allowable costs/cost principles and cash management. The District understated the total students provided education reported on its impact aid application by two students. Criteria and Effect: Uniform Guidance specifically requires entities to maintain written policies for allowable costs/cost principles and cash management. The District?s impact aid application should be supported by student counts and the application should be reviewed for errors. Not properly maintaining such policies and review procedures leads to noncompliance and potential unallowable costs. Repeat Finding from Prior Year: Yes, 2019-007 modified. Recommendation: The District should create written policies for allowable costs/cost principles and cash management and maintain adequate documentation supporting its Impact Aid application. Someone should review the Impact Aid application. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Questioned Costs: None Condition and Cause: The District has not segregated all accounting duties (to include duties specifically related to compliance requirements of federal funding) to ensure that no one person is involved in more than one of the accounting and reporting processes of authorization, execution, custody, and recording for any given transaction. The District has limited oversight over accounting or compliance with funding sources. The District has limited staff available to fully segregate all duties. No written policies exist for data security, internet and mobile device use, or contingency plan. Backups are not performed on the accounting data. Criteria and Effect: All good systems of internal accounting control include adequate segregation of duties so no one individual handles a transaction from its inception to its completion. Employees whose responsibilities encompass two or more phases of a transaction increase the risk of undetected errors, omissions, or misappropriation of assets of the District. Adequate oversight should be included in the internal control processes. Information technology policies and controls help safeguard the District from electronic threats, and backups provide the District with the ability to maintain records in the event of a disaster. A lack of information technology policies and backups could cause the District to lose data. Repeat Finding from Prior Year: Yes, prior year finding 2018-001 Recommendation: We recommend the District evaluate the internal controls in the accounting and reporting process to determine if additional segregation of duties is feasible or if additional mitigating controls can be implemented, including oversight by management or the board. We also recommend the District prepare and communicate policies for data security, internet and mobile device use, and a contingency plan. A backup policy should also be prepared and implemented to ensure accounting data is maintained. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Reporting Questioned Costs: None Condition and Cause: We were requested to draft the audited financial statements and the SEFA, and related footnote disclosures as part of our regular audit services. Ultimately, it is management?s responsibility to provide for the preparation of the District?s statements and footnotes, and the responsibility of the auditor to determine the fairness of presentation of those statements. From a practical standpoint, we do both for the District at the same time in connection with our audit. This is not unusual for us to do with organizations of the District?s size. Criteria and Effect: It is our responsibility to inform the School Board that this deficiency could result in a material misstatement to the financial statements that would have not been prevented or detected by the District?s management. Repeat Finding from Prior Year: Yes, prior year finding 2018-002 Recommendation: We have instructed management to review a draft of the auditor prepared financials in detail for their accuracy; we have answered any questions they might have, and have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in the District?s financial statements. We are satisfied that the appropriate steps have been taken to provide the District with the completed financial statements. It is the responsibility of management and the School Board to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Questioned Costs: None Condition and Cause: We identified misstatements in the District?s financial statements causing us to propose material audit adjustments. The District did not reconcile accounts to subsidiary schedules or complete year-end adjustments to provide audit ready financial data. We also noted bank reconciliation items dated after year-end. Criteria and Effect: A good system of internal accounting control includes proper reconciliation of all general ledger accounts and adjustment of those accounts to the proper balances. Inadequate internal controls over recording of transactions affect the District?s ability to detect misstatements in amounts that could be material in relation to the financial statements. Repeat Finding from Prior Year: Yes, prior year finding 2018-003 Recommendation: We recommend the District reconcile all general ledger accounts and adjust the accounts to the proper balances in a timely manner. We also recommend check dates match the posting dates in the general ledger software. Response/Corrective Action Plan: Management is in agreement with the finding. See attached Corrective Action Plan.

Federal Programs Affected: Title II (CFDA # 84.367) and Title IV (CFDA # 84.424) Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Questioned Costs: None exceeding reportable threshold. Condition and Cause: We noted the following errors during our sample testing of 36 payroll transactions and 24 non-payroll disbursement transactions. Errors noted were due to lack of supporting documentation: a.One non-payroll disbursement had only one signature on the check. b.Gross pay for 5 employees could not be recalculated with provided contract, approved pay rate, timecard, or other supporting documentation. c.The ND retirement deductions could not be recalculated for 9 employees. d.The District does not have voided check copies Criteria and Effect: Uniform Guidance requires expenditures to follow the allowable costs as outlined in the grant agreements and also requires adequate documentation of all federal disbursements. For non-federal disbursements, accounting standards require substantiating documentation to be maintained to support the business reasonableness of all expenditures. Lack of adequate documentation could result in questioned costs or misappropriation of District funds. Repeat Finding from Prior Year: Yes, prior year finding 2018-007 Recommendation: Control processes regarding recordkeeping and maintenance of substantiating documentation should be maintained and reviewed to ensure documentation is being kept as evidence of the propriety of the expenditure. Review of expenditures should be documented on the expenditure documentation. Response/Corrective Action Plan: Management is in agreement with the finding. See attached Corrective Action Plan.

Federal Programs Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirements: Reporting Questioned Costs: None Condition and Cause: The annual report filing to the federal clearinghouse, including the data collection form, will be filed late. Criteria and Effect: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires the District, if it expends more than $750,000 of federal funds, to submit the audit reporting package and data collection form to the federal audit clearinghouse within nine months after year-end. The District was not in compliance with such requirements, which could lead to a reduction in future funding from granting agencies. Repeat Finding from Prior Year: Yes, prior year finding 2018-009 Recommendation: The District should ensure accuracy of year-end financial information to ensure timely submission of reports. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

Federal Program Affected: All major federal programs as listed in #7 in section A ? Summary of Audit Results Compliance Requirement: Allowable Costs/Cost Principles, Cash Management, and Special Reporting Questioned Costs: None Condition and Cause: The District does not have written policies for allowable costs/cost principles and cash management. The District overstated the total students provided education reported on its impact aid application by 13 students. Criteria and Effect: Uniform Guidance specifically requires entities to maintain written policies for allowable costs/cost principles and cash management. The District?s impact aid application should be supported by student counts and the application should be reviewed for errors. Not properly maintaining such policies and review procedures leads to noncompliance and potential unallowable costs. Repeat Finding from Prior Year: Yes, 2018-010 modified. Recommendation: The District should create written policies for allowable costs/cost principles and cash management and maintain adequate documentation for Impact Aid. Someone should review the impact aid application. Response/Corrective Action Plan: The District agrees with the above finding. See Corrective Action Plan.

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