UNIFIED SCHOOL DISTRICT #413

Compliance requirement: 7 CFR section 245.7 states that sources of verification may include written evidence, collateral contacts, and systems of records. Written evidence shall be used as the primary source of information and includes wage stubs, award letters, and letters from employers. If written evidence is insufficient, collateral contacts, organizations that can verbally confirm the household?s income, can be used as well. If neither are available, eligibility shall be terminated in accordance with the normal procedures for failure to cooperate with verification efforts. Condition: During our testing of verification of income of households sampled during the year, we tested all households chosen for verification during the year. During this testing, we noted one household whose income was not properly verified, resulting in the household receiving improper benefits. Context: The household received a status change from reduced lunches to free lunches after using their tax return as income verification for their pension/IRA income. Tax returns are only allowed to be used to verify income if reporting self-employment income. Effect: The breakdown of internal controls in this area could adversely affect households by allowing them to receive free or reduced lunches that they are ineligible for. Recommendation: Procedures should be implemented requiring that all income should be verified using proper documentation. Views of responsible officials and planned corrective action: See the Corrective Action Plan on page 64 of the current year audit.

Finding 2019-001 ? Allowable Costs: Questioned Federal Programs: Costs U.S. Department of Education Title I ? CFDA 84.010 Compliance requirement: 2 CFR section 299.2 states that the written fiscal and administrative requirements must (b) ensure that funds received are spent only for reasonable and necessary costs of the program; and (c) ensure that funds are not used for general expenses required to carry out other responsibilities of State or local governments. Condition: During our testing of expenses of the District, we selected twenty-five (25) expense charges for each major program. During this testing, it was noted the District recorded general supplies expenditures incorrectly in the Title I Fund. Two (2) of twenty-five (25) expenses selected for testing were incorrectly recorded using the wrong short account number, resulting in charges not applicable to Title I. Context: Disbursements were made by the District and were recorded in the incorrect fund without review from the program director. Effect: The breakdown of internal controls in this area could adversely affect the recording, processing, summarization, and reporting of financial data, as well as create an opportunity for fraud to occur, or unallowable costs. Recommendation: Procedures should be implemented requiring the review of all transactions relating to the Title I Program by the program director to ensure that expenditures are recorded in the appropriate account. Views of responsible officials and planned corrective action: See the Corrective Action Plan on page 62 of the current year audit.