Emanuel County Board of Education

FA 2023-001 Improve Controls over Equipment Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: Direct AL Number and Title: 93.600 – Head Start Federal Award Number: 04CH01123704 (Year: 2023) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Head Start program. Background Information: The Head Start program promotes school readiness by enhancing the cognitive, physical, behavioral, and social-emotional development of children through the provision of educational, health, nutritional, social, and other services to low-income children and families. The program is designed to involve parents in their child’s learning and development, and to help parents make progress toward their educational, literacy, and employment goals. Head Start funding was granted directly to the Emanuel County Board of Education by the U.S. Department of Health and Human Services (HHS). Head Start funds totaling $965,983.77 were expended and reported on the School District’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, “Property records must be maintained 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.” In addition, the Uniform Guidance, Section 200.313(d)(2) states, “A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years.” Condition: The following deficiencies were noted when reviewing the Head Start program equipment listing: • Property records did not include the following required components for all items: (1) Who holds title, (2) percentage of Federal participation in the project costs for the Federal award under which the property was acquired, and (3) use and condition of the property. • There was no evidence that a physical inventory had been performed in either the current year or the previous year. Cause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to conduct an inventory. Additionally, missing components on the inventory listing were an oversight. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance. Failure to maintain a complete and accurate equipment listing and reconcile results of a physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or federal funds. Recommendation: The School District should develop and maintain an equipment listing that reflects all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed, and the results are reconciled back to the equipment listing at least once every two years. Views of Responsible Officials: We concur with this finding.

See Schedule of Findings and Questioned Costs for chart/table Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Special Education Cluster. Criteria: 2 CFR section 200.430(i) states in part that ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity?? In addition, 2 CFR 200.303(a) states in part that the ?non-Federal entity must: (a) 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? (c) Evaluate and monitor the non-Federal entity?s compliance with statutes, regulations and the terms and conditions of Federal awards.? Condition: A random sample of 18 employees were selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. For two of the employees tested, documentation could not be provided to support supplemental salary payments. Questioned Cost: Questioned costs of $10,000.00, with likely questioned costs of $29,805.79, were identified for unsupported salary payments. Cause: In discussing these deficiencies with the School District, they indicated that there was turnover in the Special Education Cluster Director position. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Effect or Potential Effect: Failure to pay employees of the Special Education Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Special Education Cluster fund. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments to ensure that Special Education Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are properly implemented. Views of Responsible Officials: We concur with this finding.