Unified School District Number 494

SIGNIFICANT DEFICENCY Internal Controls and Compliance Criteria: Pursuant to the Code of Federal Regulations (CFR), Title 2 Grants and Agreements, Subpart D Post Federal Award Requirements, Section 200.303 “the non-federal entity must establish and maintain effective internal control over the Federal aware that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: When investigating the controls related to equipment management, we became aware that the District has implemented new procedures to track and maintain an inventory list adequately. However, the infrastructure items bought were not inventoried. Only non-infrastructure items were being inventoried and tracked. Cause: The internal control-related infrastructure items for the Education Stabilization Fund are nonexistent. Effect: There is noncompliance and a lack of internal control regarding the infrastructure items for the Education Stabilization Fund. Recommendations: The District should include infrastructure items in the current inventory system. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding. See the separate document for planned corrective actions.

Recommendations: The District should include infrastructure items in the current inventory system. Action Taken: We agree with the recommendation. Our targeted implementation date is January 2026.

2024-001

SIGNIFICANT DEFICENCY Internal Controls and Compliance Criteria: Nonfederal entities shall include in their construction contracts, subject to the Wage rate requirements, a requirement for the contractor to submit to the nonfederal entity weekly, for each week in which any contract is performed, a copy of the payroll and a statement of compliance as required by 2 CFR sections 5.5 and 5.6 Condition: Tatro Plumbing, Inc. did not submit weekly, for each week in which their contract work was performed, a copy of their payroll and a statement of compliance with the Wage Rate Requirements. Cause: The controls related to payroll paid under the Wage Rate Requirements are nonexistent. Effect: There is a noncompliance and a lack of internal control related to Wage Rate Requirements for construction contracts greater than $2,000 for the Education Stabilization Fund. Recommendations: The District should put controls in place that require contractors performing contract work valued at more than $2,000 and paid with federal funds to submit the required payroll reports, per the Wage Rate Requirements, throughout the contract work. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding. See the separate document for planned corrective actions.

Recommendations: The District should put controls in place that require contractors performing contract work valued at more than $2,000 and paid with federal funds to submit the required payroll reports, per the Wage Rate Requirements, throughout the contract work. Action Taken: We agree with the recommendation. Our targeted implementation date is January 2026

2024-002

SIGNIFICANT DEFICENCY Internal Controls and Compliance Criteria: Pursuant to the Code of Federal Regulations (CFR), Title 2 Grants and Agreements, Subpart D Post Federal Award Requirements, Section 200.303 “the non-federal entity must establish and maintain effective internal control over the Federal aware that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: When investigating the controls related to equipment management, we became aware that the District has implemented an inbound procedure for recording newly purchased equipment. The current control system in place for the equipment does not include a yearly physical inventory. Cause: The internal control related to equipment maintenance after its initial receipt for Education Stabilization Fund is non-existent. Effect: There is a noncompliance and lack of internal control related to continued maintenance of the equipment for the Education Stabilization Fund. Recommendations: The District should, on at least a yearly basis, perform a physical inventory of the equipment. The procedure must be adequately recorded and disclosed to include the name of the individual performing the service, the date, condition of the equipment, and verify its location. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding. See separate document for planned corrective actions.

Recommendations: The District should, on at least a yearly basis, perform a physical inventory of the equipment. The procedure must be adequately recorded and disclosed to include the name of the individual performing the service, the date, condition of the equipment, and verify its location. Action Taken: We agree with the recommendation. Our targeted implementation date is June 2025.

2023-002

SIGNIFICANT DEFICENCY Internal Controls and Compliance Criteria: Nonfederal entities shall include in their construction contracts subject to the Wage rate requirements, a requirement for the contractor to submit the nonfederal entity weekly, for each week in which any contract is performed, a copy of the payroll and a statement of compliance as required by 2 CFR sections 5.5 and 5.6 Condition: Tatro Plumbing, Inc. did not submit weekly, for each week in which their contract work was performed, a copy of their payroll and a statement of compliance with the Wage Rate Requirements. Cause: The controls related to payroll paid under the Wage Rate Requirements are non-existent. Effect: There is a noncompliance and lack of internal control related to Wage Rate Requirements for construction contracts greater than $2,000 for the Education Stabilization Fund. Recommendations: The District should put controls into place that will require contractors, performing contract work greater than $2,000 and paid with federal monies, to submit the required payroll reports, per the Wage Rate Requirements, throughout the contract work. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding. See separate document for planned corrective actions.

Recommendations: The District should put controls into place that will require contractors, performing contract work greater than $2,000 and paid with federal monies, to submit the required payroll reports, per the Wage Rate Requirements, throughout the contract work. Action Taken: We agree with the recommendation. Our targeted implementation date is December 2024.

Finding 2023-002 SIGNIFICANT DEFICENCY Internal Controls Criteria: Pursuant to the Code of Federal Regulations (CFR), Title 2 Grants and Agreements, Subpart D Post Federal Award Requirements, Section 200.303 “the non-federal entity must establish and maintain effective internal control over the Federal aware that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: When investigating the controls related to equipment management, we became aware that the District relies on a third party to maintain records without any secondary review of its completeness. The current maintenance records does not include non-technology records and its related funding source. Cause: The controls related to equipment maintenance for Education Stabilization Fund are non-existent. Effect: There is no internal control related to equipment maintenance for the Education Stabilization Fund. Recommendations: The District should have an employee compare the third party’s equipment inventory records with the financial records for completeness. An employee should also be present during the physical equipment inventory each year and maintain records of proof for its occurrence. Lastly, the current inventory records should also be altered in order to be maintained with information required by 2 CFR section 200.313(d)(2) that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data of disposal and sales price of the property. Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding. See separate document for planned corrective actions.

Finding 2023-002 Recommendations: The District should have an employee compare the third party’s equipment inventory records with the financial records for completeness. An employee should also be present during the physical equipment inventory each year and maintain records of proof for its occurrence. Lastly, the current inventory records should also be altered in order to be maintained with information required by 2 CFR section 200.313(d)(2) that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data of disposal and sales price of the property. Action Taken: We agree with the recommendation. Our targeted implementation date is June 2024.