THE SCHOOL DISTRICT OF GEORGETOWN COUNTYLocal Government

Program: Magnet Schools Assistance (Assistance Listing No. 84.165) Compliance Requirement – Cash Management Finding Type: Material Noncompliance / Material Weakness in Internal Controls over Compliance Criteria: 2 CFR Part 200.305 requires that for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. In addition, interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually through a Fedwire Funds Service payment. Condition: In March 2023, the District performed a drawdown of all available funding allocated to the Magnet Schools Assistance Program (MSAP). This drawdown included the entirety of the Year 1 program allocation, in addition to the entirety of the Year 2 program allocation for a total drawdown of $7,804,837. As of June 30, 2023, the District had expended $1,077,941 of these funds, leaving an excess drawdown of $6,726,896. Interest earned on these funds, to be returned to the federal government, totaled $20,791 as of June 30, 2023 and had not been recorded. Cause: The District failed to have an adequate documented system of internal controls in place surrounding the drawdown of funds for MSAP. Effect: The failure to properly monitor drawdowns and limit the time between drawdown and disbursement can result in program non-compliance and the loss of program funds altogether. In addition, excess drawdowns can lead to unnecessary federal interest being earned that would have to be returned. Auditor’s Recommendations: The District should implement internal control processes and monitoring to handle MSAP similar to other federal programs in the way it requests reimbursement and/or drawdown funds. Views of Responsible Official: The District will implement additional internal control procedures to require the MSAP Director complete a request for reimbursement based off general ledger expenditures similar to other federal programs at the District. In addition, the District will implement additional monitoring procedures to ensure requests for reimbursement are received and reflect general ledger transactions prior to performing any drawdown of federal funds.

Program: Magnet Schools Assistance (Assistance Listing No. 84.165) Compliance Requirement – Procurement, Suspension and Debarment Finding Type: Material Noncompliance / Material Weakness in Internal Controls over Compliance Criteria: 2 CFR Part 180.300 requires that 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 and its principals, as defined in 2 CFR section 180.995 and agency adopting regulations, are 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) and available at https://www.sam.gov/ (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity. In addition, under 2 CFR 200.318, the non-Federal entity must have and use documented procurement procedures for the acquisition of property or services required under a Federal award or subaward. Condition: The Magnet Schools Assistance Program (MSAP) office did not verify that contracted vendors are not suspended or debarred or otherwise excluded from participating in program transactions prior to their participation. In addition, the MSAP Director entered into a contract for services without having the authority to do so, thus circumventing the procurement procedures of the District. Cause: The MSAP office was unaware of the federal requirements related to verifying that contracted vendors are not suspended or debarred or otherwise excluded from participating in program transactions. In addition, it appears that the MSAP Director felt her position provided her the authority to enter into contracts under her program, regardless of standard District procurement procedures. Effect: The failure to verify suspension and debarment can result in entering into prohibited transactions, leading to non-compliance and the loss of program funding. In addition, not following procurement procedures can result in prohibited transactions and the repayment of federal funds used. Auditor’s Recommendations: The MSAP office should familiarize themselves with federal compliance requirements including suspension and debarment. In addition, the MSAP office should ensure all transactions that do not qualify as “small-purchases” be procured by the District Procurement Department. Views of Responsible Official: The MSAP program will undergo specific training related to federal compliance including procurement, suspension and debarment. The District will implement additional monitoring procedures to ensure transactions that do not qualify as “small-purchases” be procured by the District Procurement Department.