TEC CONNECTIONS ACADEMY COMMONWEALTH VIRTUAL SCHOOLLocal Government

2024-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education Special Education Cluster – CFDA 84.027 & 84.173 COVID-19 – Special Education Cluster – CFDA 84.027X Material Weakness in Internal Controls Over Compliance and Compliance Finding Criteria: Per 2 CFR section 200.319, procurements must provide for full and open competition. Condition: Three vendors were awarded a contract without a proper competitive procurement process. A fourth vendor was awarded a contract that the School believes is a sole source procurement, but written documentation of the circumstances and rationale for the non-competitive procurement, as well as a history of the process, was not maintained by the client. Cause: The School relied on State procurement exemptions which do not apply to Federal procurements and did not have procedures in place to document non-competitive procurements. Effect: The School is not in compliance with Federal procurement requirements. Questioned Costs: $466,606.60 Repeat Finding from Prior Year: No Recommendation: The School should implement procedures to perform appropriate procurement procedures on all applicable contracts for goods and services and to maintain all required documentation of the procurement process in the School purchasing files. Views of Responsible Official: Management agrees with the finding.

Finding No. 2022-001 Material weakness in internal control over financial reporting ? contract monitoring/compliance Condition and context: Based upon the previous years? audits, management and the Board of Directors have worked during fiscal year 2022 to address certain deficiencies which have been identified surrounding financial reporting; however, a continued material weakness during the year involved the School?s monitoring and payments made in conjunction with the contractual arrangement with the School?s primary vendor, which provides various curriculum, instruction, technology and other services, Connections Education, LLC. The agreement in part provides for various per student upfront fees for enrollment and related technology fees being invoiced on a monthly basis which are not supported by sufficient detail of actual students/participants. Additionally, other services provided, supporting detail provided is not being formally documented/reviewed to the amount invoiced, prior to payment. Effect or potential effect: The School may have overpaid amounts to the vendor. Questioned cost: The School paid an aggregate of $2.9 million associated with these fees. Cause: The School and the vendor?s established contractual arrangement established does not provide sufficient clarity as to terms/conditions for certain upfront per student fees. Additionally, current management has worked on implementing more formalized internal controls surrounding all aspects of the School?s financial reporting system. Subsequent to year end, management and the Board of Directors have engaged legal counsel in communications with the vendor regarding the agreement. Criteria: Adequate internal controls surrounding financial reporting and compliance with contractual arrangements should ensure that all contractual arrangements are clearly evidenced as to terms and conditions; moreover, it is important that all invoices received from vendors are accompanied by sufficient detail that can be formally reconciled to the contractual terms. Identification as a repeat finding: As indicated above, material weaknesses in financial reporting were reported in the prior year (inclusive of contractual arrangements). Auditor?s recommendations: We recommend the School ensure that all contractual arrangements are clearly defined as to all specific terms and conditions. Given the nature of the School?s operations and the many working components within the arrangement, it is essential that all terms be clear and understood by all parties prior to execution of the agreement. Furthermore, it is imperative that the School ensure appropriate detail is provided for all charges (per unit, etc.) and is formally reconciled to the underlying contract (and documented accordingly) to ensure that the School only pays in accordance with agreed-upon terms. All documentation should be formally reconciled and attested to by appropriate personnel and maintained together. Legal counsel should be consulted in the establishment of material contractual arrangements.

Finding No. 2022-001 Material weakness in internal control over financial reporting ? contract monitoring/compliance Condition and context: Based upon the previous years? audits, management and the Board of Directors have worked during fiscal year 2022 to address certain deficiencies which have been identified surrounding financial reporting; however, a continued material weakness during the year involved the School?s monitoring and payments made in conjunction with the contractual arrangement with the School?s primary vendor, which provides various curriculum, instruction, technology and other services, Connections Education, LLC. The agreement in part provides for various per student upfront fees for enrollment and related technology fees being invoiced on a monthly basis which are not supported by sufficient detail of actual students/participants. Additionally, other services provided, supporting detail provided is not being formally documented/reviewed to the amount invoiced, prior to payment. Effect or potential effect: The School may have overpaid amounts to the vendor. Questioned cost: The School paid an aggregate of $2.9 million associated with these fees. Cause: The School and the vendor?s established contractual arrangement established does not provide sufficient clarity as to terms/conditions for certain upfront per student fees. Additionally, current management has worked on implementing more formalized internal controls surrounding all aspects of the School?s financial reporting system. Subsequent to year end, management and the Board of Directors have engaged legal counsel in communications with the vendor regarding the agreement. Criteria: Adequate internal controls surrounding financial reporting and compliance with contractual arrangements should ensure that all contractual arrangements are clearly evidenced as to terms and conditions; moreover, it is important that all invoices received from vendors are accompanied by sufficient detail that can be formally reconciled to the contractual terms. Identification as a repeat finding: As indicated above, material weaknesses in financial reporting were reported in the prior year (inclusive of contractual arrangements). Auditor?s recommendations: We recommend the School ensure that all contractual arrangements are clearly defined as to all specific terms and conditions. Given the nature of the School?s operations and the many working components within the arrangement, it is essential that all terms be clear and understood by all parties prior to execution of the agreement. Furthermore, it is imperative that the School ensure appropriate detail is provided for all charges (per unit, etc.) and is formally reconciled to the underlying contract (and documented accordingly) to ensure that the School only pays in accordance with agreed-upon terms. All documentation should be formally reconciled and attested to by appropriate personnel and maintained together. Legal counsel should be consulted in the establishment of material contractual arrangements.

FINDING NO. 2021-002 U.S. DEPARTMENT OF EDUCATION Passed through the Commonwealth of Massachusetts? Department of Elementary & Secondary Education TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES (Assistance Listing Number 84.010) Pass-through number: 305-413351-2021-3902 and 305-317614-2020-3902 Criteria: Recipients of federal grants are required to ensure costs charged to federal programs are in accordance with allowable cost principles as detailed in the OMB Uniform Guidance. Most specifically, time-and-effort documentation associated with employees working on activities must be documented within records in a manner to support the employee?s charge to the federal program. Condition, Context and Cause: Based upon the current practices, there is no documentation of time-and-effort which is being maintained in accordance with requirements of the Uniform Guidance. Based upon our audit procedures we noted approximately (10) teachers, (3) support staff and (1) administrator?s wages were charged to the program during fiscal year 2021. These individuals? salaries and the associated fringe benefit costs represented the majority of the expenditures reported. While there has been had turnover and changes in personnel responsible for accounting and financial oversight in recent years, current established internal controls surrounding financial reporting as detailed within Finding 2021-001 (above) and Finding 2021-003 (below), indicate lapses which affect not only financial reporting, but the School?s compliance with federal requirements which can have a direct and material effect upon these programs. It should also be noted amounts reported as expended under the major program have been understated by approximately $46,000. This was identified as a result of our audit procedures. We have detailed this in our Independent Auditor?s Report on the Schedule of Expenditures of Federal Awards. While the School adopted additional formalized manuals in April 2021, it is important for the School to review adopted policies and procedures in conjunction with DESE findings and recommendations as well as OMB Guidance and ensure detailed compliance thereto. Moreover, the oversight/pass-through agency (DESE) performed a review in June 2021 (for other federal programs) and noted many findings. Questioned Costs $773,517. This represents total expenditures reported for the program on the School?s SEFA. Possible Effect: Costs charged to the program may be disallowed. Auditor?s Recommendations: In our professional judgement, it is imperative the School?s management and those charged with governance perform an extensive review of established policies and procedures in accordance with the Uniform Guidance, OMB?s compliance supplement and information and guidance provided by the pass-through entity to ensure internal control policies and procedures are addressing specific compliance requirements of all federal programs. A formalized review should be performed on an annual basis and should be formally documented to ensure each compliance requirement of each federal program which the School receives is complied with. View of Responsible Official and Planned Corrective Action: The school plans to improve the internal controls for Federal Grant award as follows: ? TECCA has been actively seeking a Grants Manager; the search started July 8, 2021 and was re-posted August 30, 2021 and February 9, 2022. The Grant Manager position will be covered with in-house employees of the Business Office, effective Monday, 2/14/22. ? Time and Effort Certifications have been signed and recorded as of 1st semester FY22 school year. ? Contact was made throughout the year with DESE Grants Liaison for guidance regarding TECCA?s responsibilities. Grant Liaison was difficult to contact, as retirement was near. TECCA is anticipating looking forward to a new DESE grant liaison that will be able to work closely with TECCA.

FINDING NO. 2021-003 ? Establishment and Review of Policies & Procedures Criteria and Condition: Implementation of the Uniform Guidance highlighted the importance and requirement for grantees to maintain internal control policies and procedures surrounding the compliance and administration of federal grants, focusing on clearly defining the key components (control environment, risk assessment, control activities, information and communication, monitoring). As indicated in Finding 2021-001 and 2021-002 (above) current established policies and procedures are a continued weakness in the School?s financial reporting processes. This is a repeat finding which was reported on in the prior year. Significant deficiencies have been reported in previous years related to financial reporting. Potential Effect: Lack of documentation of internal controls policies and procedures may lead to situations of noncompliance with federal requirements. Moreover, failure to establish, implement and monitor these policies and procedures (financial and federal compliance) can have an affect upon the financial statements and reporting thereof. Auditor?s Recommendation: As detailed above, we continue to recommend the School document formal policies and procedures surrounding all aspects of grant administration and compliance. In accordance with all programs? specific requirements. View of Responsible Official and Planned Corrective Action: The school plans to improve Policies & Procedures as follows: ? Update Grant Policy manual to include guidance by OMB Uniform Guidance. ? Ensure regular periodic review of DESE School Finance Regulations and Federal Grant Program guidance (e.g. Title I Guidance, Resources for Program Directors, and Program Monitoring) Overall Implementation: ? TECCA personnel will continue to consult regularly to review and update financial policies. ? TECCA will comply with the requirement to have Audit Materials available by September 1st each year so that a complete and timely audit can be performed. ? TECCA will identify and implement a new financial system for FY 23.

Criteria and Condition: Implementation of the Uniform Guidance highlighted the importance and requirement for grantees to maintain internal control policies and procedures surrounding the compliance and administration of federal grants, focusing and clearly defining the key components (control environment, risk assessment, control activities, information and communication, monitoring), the School has yet to fully formalize documentation of all aspects of internal control surrounding grant compliance and administration as recommended by federal guidelines. Effect: Lack of documentation of internal controls policies and procedures may lead to situations of noncompliance with federal requirements. Questioned Costs: None Auditor's Recommendation: We recommend that the School document formal policies and procedures surrounding all aspects of grant administration and compliance. View of Responsible Official and Planned Corrective Action: TECCA will develop a Grant Manual that formalizes policies and procedures on grant administration and compliance.