CALVERT COUNTY PUBLIC SCHOOLS

Criteria: The Board must maintain an adequate system of internal control over financial reporting in order to initiate, authorize, record, process, and report financial data reliably in accordance with generally accepted governmental accounting standards as established by the Governmental Accounting Standards Board (GASB). Condition: During our testing of construction in process (CIP), we noted that CIP was understated within the entity wide financial statements by $5,487,053. Cause: The Board did not properly evaluate capital outlay cost to determine the completeness of CIP. Effect: The fixed asset amount on the entity wide financial statements, before the audit adjustment, was understated. Recommendation: We suggest the Board ensures all fixed asset accounts are properly reconciled to fund level activity as part of the closing process. We recommend the Board evaluate roles and responsibilities of the personnel within the department as to whom will perform the reconciliation as well as review it for accuracy.

2022-001 Federal Agency: U.S. Department of Treasury and U.S. Department of Agriculture Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) and Child Nutrition Cluster (CNC) Assistance Listing Number: 21.027 and 10,553, 555 559 Federal Award ID Number (FAIN) and Year: S425D2000005, 2021- 2024 (CLSFRF), and 2022 (CNC) Pass-Through Agency: Maryland State Department of Education Pass-Through Number(s): 21176201, 21189901, 21181601, 21187301, 21177401, 21188801, 21184001(CSLFRF) and CNC: none Award Period: March 3, 2021, through - December 31, 2024 (CSLFRF) and July 1, 2021, through June 30, 2022 (CNC) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award 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. These internal controls should comply with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our testing, we noted the schools did not maintain documentation to support vendor?s suspension and debarment status. The school?s procurement procedures and annual procurement updates advise employees to verify the vendor?s suspension and debarment status, but evidence of the review is not maintained. CLA was not able to determine if the vendor was not suspended or debarred prior to contracting with the schools. We were able to confirm that the vendor was not identified as suspended or debarred via SAMs.gov during the audit. Questioned costs: None Context: During our testing, two of the five CNC vendors and four of the four CSLFRF vendors did not have documentation of their suspension or debarment status prior to the school?s contracting with the vendor. Cause: The client was aware of the requirement and ensured communication of the requirement was provided to the schools? employees but did not maintain documentation of the review. Effect: The schools did not have adequate monitoring controls to provide evidence of compliance with the requirement. Repeat Finding: No Recommendation: We recommend that the schools develop internal controls and procedures to ensure that documentation of vendor?s suspension and debarment status is maintained in accordance with the required retention policy. Views of responsible officials: There is no disagreement with the audit finding.

See Schedule of Findings and Questioned costs Criteria or specific requirement: Compliance: - Property records must be maintained for equipment acquired under a federal award that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and 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 including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: We noted compliance with Federal property records requirements; however, CCPS did not perform the physical inventory this two year cycle. Context: We sample 8 pieces of equipment from CCPS Federal property records. We were unable to verify the completion of the bi-annual inventory for 8 pieces of equipment. Questioned costs: None, the cost for the equipment was allowed. The non-compliance relates to physical inventory requirement. Cause: The program team did not conduct the required physical inventory due to an oversight of the requirement's timing Effect: Management can lose track of Federal property and experience non-compliance with Federal property requirements. Statistically valid: Yes Recommendation: We recommend that CCPS review current procedures and enhance (as deemed necessary) to ensure that documentation to support the bi-annual physical inventory is maintained in accordance with the required retention policy. Views of responsible officials: Agree with the finding.

See Schedule of Findings and questioned costs Criteria or specific requirement: Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: CCPS did not maintain documentation to support the approval of substitute teachers' work hours. For the pay period ending January 17, 2020, two substitutes were paid $250 for work supporting the program. An employee with direct knowledge of the program objectives did not support the disbursement with an "approval to pay." The employee's received payment as follows: 1. Employee 1, worked 1 day @ $90 a day 2. Employee 2, worked 2 days @$80 a day Context: Management did not approve the employee's work hours for 2 of the 40 payroll transactions selected for testing. Questioned costs: Questioned costs in the amount of $250 represents the total disbursed to the substitutes. Cause: CCPS no longer uses the AESOP substitute system, which documents approval of substitute's time charged to grant. CCPS did not implement an alternative internal control procedure for documenting the approval of substitute's work hours. Effect: Management could charge substitute teachers' wages to the Federal program without appropriate support for the hours worked. Statistically valid: Yes Recommendation: We recommend that CCPS implement procedures for documenting the approval of substitutes work hours and the procedures be consistently performed. Views of responsible officials: Agree with the finding.