Education Alliance-Business and Community for Public Schools, Inc.

Condition The Education Alliance did not submit the Single Audit Reporting Package to the Federal Audit Clearinghouse prior to the March 31, 2026, deadline. Criteria Based on requirements set forth by 2 CFR section 200.512(a), the Education Alliance is required to submit the Single Audit Reporting Package to the Federal Audit Clearinghouse (FAC) by the earlier of thirty calendar days after receipt of the auditor's reports or nine months after the end of the audit period. Cause The delay in submission was due to the audited financial statements not being prepared in a timely manner. As described in Finding 2025-001, the auditee has a material weakness in internal control over financial reporting related to federal grant accounting, including inadequate controls over grant accounting and revenue recognition to ensure timely completion of the audited financial statements. Effect Because the audited financial statements were not completed timely, the auditee was unable to meet the FAC submission requirements under 2 CFR section 200.512(a). This resulted in noncompliance with federal regulations. Questioned Costs No questioned costs were identified. Recommendation We recommend the Education Alliance complete and submit all future annual Single Audits to the Federal Audit Clearinghouse prior to the required deadline to ensure all compliance requirements are met. Management Response Management will coordinate with external auditors to ensure timely completion of the audit and to ensure compliance with 2 CFR 200.512 requirements.

Condition During our testing of cash draws, we noted the Education Alliance requested and received federal funds for certain expenditures from subrecipients prior to the related costs being incurred. Specifically, funds were requested based on subrecipient annual agreements rather than actual expenditures incurred as of the date of the draw request. Criteria In accordance with requirements set forth by 2 CFR section 200.305(b), non-federal entities are required to minimize the time elapsed between the transfer of federal funds from the awarding agency and the disbursement of those funds for programmatic purposes. Cause The Education Alliance did not have adequate controls in place to ensure that cash drawdowns for subrecipient activity aligned with the timing of actual expenditures incurred by subrecipients. Effect Federal funds were drawn in advance of allowable programmatic expenditures, resulting in noncompliance with federal cash management requirements and the accumulation of significant refundable advances at year-end. Questioned Costs No questioned costs were identified. Recommendation We recommend the Education Alliance implement procedures to ensure that cash drawdowns related to subrecipient agreements are supported by expected disbursement needs, including monitoring subrecipient expenditure activity and reimbursement status, to minimize the time between receipt and disbursement of federal funds. Management Response Management will review its cash management procedures to ensure that federal drawdowns are supported by actual or immediate cash needs based on expenditures incurred. Management will also closely monitor subrecipient expenditure activity and reimbursement timing to ensure compliance with 2 CFR 200.305(b) and minimize the time between receipt and disbursement of federal funds.

Condition The Education Alliance did not timely report seven first-tier subawards subject to the Federal Funding Accountability and Transparency Act (FFATA) to the System for Award Management (SAM.gov). Criteria FFATA, as implemented at 2 CFR Part 170, requires recipients to report each first-tier subaward of $30,000 or more in federal funds to SAM.gov no later than the end of the month following the month in which the subaward was made. FFATA also requires reporting of the total compensation of the recipient’s five most highly compensated executives in certain circumstances. Cause Management did not have effective internal controls in place to identify all subawards subject to FFATA and to ensure required data was submitted to SAM.gov within the prescribed timeframe. Effect Required FFATA information was not available in the federal transparency reporting system in a complete and timely manner, which may limit public access to accurate information regarding the use of federal funds and represents noncompliance with federal award requirements. Questioned Costs No questioned costs were identified. Recommendation We recommend the Education Alliance strengthen internal controls over FFATA compliance by establishing written procedures to identify all first-tier subawards subject to FFATA reporting, assigning responsibility for preparing and reviewing FFATA submissions, maintaining a tracking log of reportable subawards and applicable due dates, and performing periodic supervisory review to confirm all required reports are submitted completely and timely to SAM.gov. Management Response Management will implement corrective actions to ensure compliance going forward, including revising written procedures to identify reportable subawards, assigning responsibility for preparation and review of FFATA submissions, maintaining a tracking log of subawards and reporting deadlines, and performing supervisory reviews to ensure reports are submitted completely and timely. Management will also provide training for relevant personnel and evaluate prior subawards to determine whether any required reports were omitted and will complete any necessary submissions to the extent permitted.

Criteria: Federal regulations 2 CFR Part 200, Sect 200.430(g) requires that wages chargerd to federal programs, including amounts claimed or used for matching, must be based on records that accuratley reflect work performed. Budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes (with restrictions). Condition: The Alliance did maintain acurate time sheeets for time worked, however time was alloacted to the federal grant based on the year-to-date percentag eof time spent on the federal program and was not adjusted to actual time spent based on the pay period and times worked in the corresponding pay period. Additionally, fringe benefits were not allocated to the federal program based on time worked in the federal program. Cause: Management was unaware of the requirement to adjust to actual time spent on the federal program. Effect: Wages, payroll taxes and fring benefits charged to the federal program are in excess of actutal amounts based on time spent working in the federal program. Questions costs: $33,921. Recommendation: We recommend that mamangement allocate time to federal programs based on time spent per pay period. If estimates will be used during the fiscal year, an adjustment should be made at year-end to adjust to actual time worked in the federal program. Additionally, fringe benefits should be allocated to the fedral program in a manner consistent with the pattern of benefits attributable to employees whose salaries are chargebable to the federal award. View of Responsible Officials: Management agrees with the finding and recommendation. See attached Corrective Action Plan.

Criteria: Federal regulations 2 CFR Part 200, Sect 200.403-200.476 defines the rules for allowable costs for federal programs. The costs must be reasonable and necessary and include supporting documenatation for all expenditures including invoices, receipts and purchase orders. Condition: The Alliance had missing or incomplete documentation for costs assigned to the grant in addition to ineligible expenses and did not allocate indirect costs directly within the general ledger. Cause:Management's internal controls over expenses did not specifically address proper documentation and recording of expenses. Effect: As a result of not having proper documentation, the determination of whether or or not a cost is properly charged to a grant cannot be determined. Requests for reimbursements of grant funds are not prepared to accurately report direct and indirect costs. Additionally, sales taxes paid and costs outside ot the grant period are unallowable costs. Questioned Costs: None. Recommendation: We recommend that managemet adopt procedures that require complete documenation for all amounts expended, which includes all credit card charges. Amounts that are to be charged to the federal grant program should be reviewed to determine whether the cost is first, allowed, and if allowed, whether the cost is a direct or indirect cost. Direct and indirect costs should be properly allocated and recorded in the general ledger. Additionally, employees responsible for charging costs to the federal program should receive training in determining allowable and unallowable costs. Views of Responsible Officials: Management agrees with the finding and recommendation. See the attached Corrective Action Plan.