DORCHESTER COUNTY SCHOOL DISTRICT TWOLocal Government

CONDITION: The School District did not obtain proper documentation of time and effort to support payroll expenditures charged to the IDEA programs on a timely basis for the year ended June 30, 2024. CRITERIA: The Uniform Guidance requires documentation of time and effort as support for payroll expenditures charged to federal programs. This documentation can be in the form of semiannual certifications for those employees charged 100% to a federal program or the documentation must show a daily breakdown of the employee's time if the employee is allocated between programs. CONTEXT, CAUSE, AND EFFECT: The District did not obtain the documentation of time and effort on a timely basis for three employees whose payroll costs were charged to the IDEA program as a result of management oversight. One of the three employees did not qualify to be charged to the IDEA program, resulting in known questioned costs of $37,000. The District’s auditors tested approximately $211,000 in key items related to the IDEA program and noted no exceptions. The District’s auditors tested a random sample of 25 other IDEA payroll expenditures and noted one employee totaling approximately $37,000 that were improperly charged to the IDEA program. This known questioned costs extrapolated to the remaining population resulted in estimated questioned costs of approximately $179,000. RECOMMENDATION: We recommend that the School District prepare/obtain sufficient documentation of time and effort for all employees paid using federal funds, as required by the Uniform Guidance, in order to ensure that only eligible payroll expenditures are charged to the program. RESPONSE: The School District agrees with this finding and will ensure sufficient documentation of time and effort is obtained in the future.

Findings Relating to the Basic Financial Statements Reported in Accordance with Government Auditing Standards: 2019-001: Timely Claim Submission Material Weakness Internal controls should be in place to ensure claims related to federal programs are submitted to the State by the State?s deadline for reimbursement. For the year ended June 30, 2019, controls to ensure timely submission of Title I reimbursements were ineffective. As a result, the claim for Title I expenditures incurred from July 1, 2018 through December 31, 2018 was not submitted prior to the deadline. As a result of this missed submission, approximately $1.4 million of Title I expenditures were not able to be reimbursed during the year ended June 30, 2019. A portion of these expenditures were re-allocated to another allowable Special Revenue Fund with available funding and the remaining expenditures were re-allocated to the General Fund. The District has applied for a waiver with the State to enable it to carryover funding for the Title I expenditures that were not reimbursed as of June 30, 2019 to the subsequent fiscal year. See finding 2019-001 related to federal awards below for more details. III. Findings and Questioned Costs Relating to Federal Awards: 2019-001: Timely Claim Submission Material Weakness Criteria: Internal controls should be in place to ensure claims related to federal programs are submitted timely. All claims must be submitted to the State no later than August 15 of the following year (i.e. August 15, 2019 for FY 2019). Condition: Claims for Title 1 expenditures incurred from July 1, 2018 through December 31, 2018 were not submitted to the State for reimbursement prior to August 15, 2019. Cause: As of June 30, 2019, controls to ensure timely submission of Title I reimbursements were ineffective. Effect: Title I expenditures that were incurred from July 1, 2018 through December 31, 2018 were not submitted to the State for reimbursement prior to August 15, 2019. The School District re-allocated a portion of these expenditures to another applicable Special Revenue Fund with available funding and the remaining expenditures were re-allocated to the General Fund as they were not allowed to be reimbursed from the Title I grant for the year ended June 30, 2019. The District has applied for a waiver with the State to defer the funding for these expenditures to the year ending June 30, 2020. Questioned Costs: $1,381,792 of expenditures initially recorded to the Title I fund have been re-classified out of the Title I fund and are excluded from the Schedule of Expenditures of Federal Awards for the year ended June 30, 2019. Context: During the School District?s trial balance reconciliation process, which was performed after the State claim submission deadline, the School District identified the claims related to July 1, 2018 through December 31, 2018 Title I expenditures were not submitted for reimbursement. These expenditures were classified out of the Title I fund and the School District has plans to use the additional funding as a carryover in the next year. Recommendation: We recommend that the School District enhance its controls to ensure claims for federal grants are submitted to the state on a timely basis, no later than the August 15 deadline. Response: The School District has implemented additional steps and procedures for the grant claiming process to include another finance specialist reconciling open grants with grant claims made each quarter.

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