CUMBERLAND COUNTY BOARD OF EDUCATION

U.S. Department of Education Passed Through the N.C. Department of Public Instruction Program Names: COVID-19 – Education Stabilization Fund (AL #: 84.425) Special Education Cluster (AL #’s: 84.027 and 84.173) Title I, Grants to Local Educational Agencies (AL #: 84.010) SIGNIFICANT DEFICIENCY Compliance – Cash Management Criteria: Controls should ensure that bank reconciliations are prepared in a timely manner each month to enable the Board to make timely decisions based upon accurate data. Condition: State bank account reconciliations were not prepared in a timely manner during the year. Effect: Since bank account reconciliations were not performed in a timely manner, management decisions could have been made by the Board while relying upon inaccurate financial reporting. Cause: The June 30, 2022 audit could not completed until late March, 2023 due to account reconciliations having to be finalized. Therefore, the account reconciliation process for the 2022-2023 year was already approximately nine months behind at the conclusion of the 2022 audit. Management implemented controls and procedures during the 2022-2023 year to address this issue and has worked diligently to catch-up these reconciliations for the 2022-2023 year. Questioned costs: None. Identification of a repeat finding: This is a repeat finding from the immediate previous audit, Finding 22-07. Recommendation: Management has indicated that with the controls and procedures put in place during the 2022-2023 year, the district is now current with its monthly reconciliation processes. We recommend that management continue to monitor and review these monthly reconciliations to ensure that all general ledger accounts are being reconciled in a timely manner. Views of responsible officials and planned corrective actions: The Board of Education agrees with this finding. Management will take the necessary actions as described in the Corrective Action Plan.

Finding 22-06 U.S. Department of Education Passed Through the N.C. Department of Public Instruction Program Names: Department of Education Cross-Cutting COVID-19 ? Education Stabilization Fund (AL #: 84.425); Title I, Grants to Local Educational Agencies (AL #: 84.010) Child Nutrition Cluster (AL #?s: 10.555, 10.559, 10.579, 10.582) Non-material Non-compliance ? Special Tests and Provisions Criteria: On an annual basis, sales tax refunds should be filed with the state in order to properly recoup and offset those expenditures. Condition: The sales tax refund for the fiscal year ended June 30, 2022 has not been prepared and filed. The Board records purchases including sales tax paid as expenditures. Effect: Sales tax costs were not reimbursed to federal programs during the year. Cause: Lack of Management oversight of the year-end close out procedures. Questioned Costs: Undetermined. Identification of a repeat finding: This is a repeat finding from the immediate previous audit, Finding 2021-009. Recommendation: Management should review the process for ensuring sales tax refunds are filed in a timely manner each year. Views of responsible officials and planned corrective actions: The Board of Education agrees with this finding. Management will take the necessary actions as described in the Corrective Action Plan.

Finding 22-07 U.S. Department of Education Passed Through the N.C. Department of Public Instruction Program Names: COVID-19 ? Education Stabilization Fund (AL #: 84.425) Special Education Cluster (AL #?s: 84.027 and 84.173) MATERIAL WEAKNESS Compliance ? Cash Management Criteria: Controls should ensure that bank reconciliations are prepared in a timely manner each month to enable the Board to make timely decisions based upon accurate data. Condition: State bank account reconciliations were not prepared in a timely manner during the year. Effect: Since bank account reconciliations were not performed in a timely manner, management decisions could have been made by the Board while relying upon inaccurate financial reporting. Cause: Lack of oversight by management. Questioned costs: None. Identification of a repeat finding: This is not a repeat finding from the immediate previous audit. Recommendation: We recommend that management implement controls and procedures to ensure that State bank account reconciliations are performed in a timely manner each month. Views of responsible officials and planned corrective actions: The Board of Education agrees with this finding. Management will take the necessary actions as described in the Corrective Action Plan.

Finding 2021-005 Non-material noncompliance ? Activities U.S. Department of Agriculture Program Name: Child Nutrition Cluster Federal Assistance Listing # 10.553-CL (10.553, 10.555, 10.559) Criteria: In accordance with program requirements, the Board is required to maintain documentation supporting the expenditures, which includes evidence of approval, of the program. Condition: For one of fifteen payroll expenditures tested, the employee?s approved timecard could not be located to support the information obtained in the payroll records for the $39 expenditure and, therefore, the employee?s time could not be substantiated. Questioned Costs: None. Cause: Documentation of the employee?s timecard could not be located. Effect: Employees may be paid incorrectly and time may be charged to the program incorrectly. Recommendation: Management should ensure that supporting documentation for expenditures is properly documented, approved and maintained. Management Response: Management will take the necessary actions as described in the Corrective Action Plan.

Finding 2021-006 Non-material noncompliance ? Reporting U.S. Department of Agriculture Program Name: Child Nutrition Cluster Federal Assistance Listing # 10.553-CL (10.553, 10.555, 10.559) Criteria: In accordance with program requirements, the Board is required to report quarterly year-to-date data via the SFS-FC-1A report on the use of program funds. These reports are due on March 1st, November 15th, April 30th, and October 1st. The Board is also required to file monthly SFSP Claim Reimbursement Summary report on a monthly basis, due on the 10th of the next month. Condition: The SFS-FC-1A report for the second quarter ending December 31, 2020, was not submitted until March 26, 2021. The SFSP Claim Reimbursement Summary report for December 2020 was filed on January 12, 2021. An extension request was not filed for either report. Questioned Costs: None, as the noncompliance identified related to a reporting deadline and not a reimbursement. Cause: Lack of oversight regarding the required deadline. Effect: Reports were filed after the deadlines. Recommendation: Management should create a process to track due dates and create a work plan that enables them to submit the reports timely. Management should ensure that timely extension requests are being filed in case a due date cannot be met. Management Response: Management will take the necessary actions as described in the Corrective Action Plan.

Finding 2021-007 Non-material noncompliance ? Activities Significant Deficiency U.S. Department of Education Program Name: Education Stabilization Fund Federal Assistance Listing # 84.425 Criteria: In accordance with program requirements, the Board is required to maintain documentation supporting the expenditures, which includes evidence of approval, of the program. Condition: We reviewed 20 payroll expenditures and noted the following: * One timecard from the payroll period was missing. * Six timecards selected contained no sign off from related supervisor. * Employee timecard was not signed by the employee or the supervisor. Questioned Costs: None. Cause: Documentation could not be located. Effect: Employees may be paid incorrectly and time may be charged to the program incorrectly. Recommendation: COVID protocols created situations where timecards were not properly completed, approved or maintained. Management should ensure that supporting documentation for expenditures is properly documented, approved and maintained on file. Management Response: Management will take the necessary actions as described in the Corrective Action Plan.

Finding 2021-008 Non-material noncompliance ? Activities Significant Deficiency U.S. Department of Education Program Name: Coronavirus Relief Fund Federal Assistance Listing # 21.019 Criteria: In accordance with program requirements, the Board is required to maintain documentation supporting the expenditures, which includes evidence of approval, of the program. Condition: For nine of fifteen payroll expenditures tested, the employee?s approved timecard could not be located to support the information obtained in the payroll records and therefore the employee?s time could not be substantiated. Questioned Costs: None. Cause: Documentation could not be located. Effect: Employees may be paid incorrectly and time charged to the program incorrectly. Recommendation: COVID protocols created situations where timecards were not properly completed, approved or maintained. Management should ensure that supporting documentation for expenditures is properly documented, approved and maintained. Management Response: Management will take the necessary actions as described in the Corrective Action Plan.

Finding 2021-009 Non-Material Non-compliance ? Special Tests and Provisions U.S. Department of Education Passed through the N.C. Department of Public Instruction Program Name: Department of Education Cross-Cutting State Public School Fund Title I, Part A Cluster Federal Assistance Listing # 84.010 Title I Grants to Local Education Agencies; Title I Grants to Location Education Agencies (Title I, Part A of ESEA) ? School Improvement U.S. Department of Agriculture Child Nutrition Cluster Federal Assistance Listing # 10.553-CL (10.553, 10.555, 10.559) Criteria: On an annual basis, sales tax refunds should be filed with the state in order to properly recoup and offset those expenditures. Condition: The sales tax refund for the fiscal year ended June 30, 2021 has not been prepared and filed. The Board records purchases including sales tax paid as expenditures. Part of recording the sales tax refund includes an adjusting journal entry to offset the tax from the expenditures and record an accounts receivable in anticipation of receiving the refund from the state. Those journal entries have not been posted and are included in the expenditures. Cause: Management oversight of the year-end close out procedures. Effect: Sales tax costs were not reimbursed to federal programs and were inappropriately included in the expenditures of each program. Questioned costs: Programs affected included: Federal Assistance Listing Program Amount N/A State Public School Fund $ 143,189 10.555 Child Nutrition $ 48,218 84.010 Title I $ 27,299 Recommendation: Management should review the process for ensuring sales tax refunds are filed and that the journal entry to reimburse federal programs occurs within the proper fiscal year. Alternatively, management may consider changing the process for recording sales tax on invoices by recording them in a sales tax receivable rather than directly charging program expenditures. Management Response: Management will take the necessary actions as described in the Corrective Action Plan.

Finding 2019-001 Non-material Noncompliance ? Reporting U.S. Department of Education Program Name: Crosscutting CFDA # 84.000 Criteria: In accordance with program requirements, split-funded employees that work on more than one cost objective sign a Personnel Activity Report statement to certify the time they spend working on different federal programs three times per year. Those reports should be reviewed and adjusted, if necessary, to ensure programs are charged according to the time spent by employees. Condition and Context: In our sample of 12 split funded employees, the percentage worked on Federal Programs was over 10% over what the employee is being paid for one employee. Questioned Costs: None, as amount was immaterial. Effect: Noncompliance with charges for split-funded employees. Cause: Usually if variances are small, no adjustment is needed. In this case, this employee should have been adjusted. Recommendation: Management should ensure that Personnel Activity Reports are reviewed and adjusted when necessary to ensure programs are charged in accordance with the time spent by split-funded employees. Views of Responsible Officials: Management acknowledges the finding.

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