Meriwether County Board of EducationLocal Government

FA 2024-001 Internal Controls over Wage Rate Requirements Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425U210012 (Year: 2022) Questioned Costs: None Identified Description: A review of construction-related expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that Wage Rate Requirements were followed appropriately. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the American Rescue Plan Elementary and Secondary School Emergency Relief Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $4,308,075.07 were expended and reported on the Meriwether County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. 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. Additionally, the Uniform Guidance, Appendix II to Part 200 – Contract Provisions for Non-Federal Entity Contracts Under Federal Awards, Part D addresses Davis-Bacon Act requirements and states, in part, “When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor.” Specifically, 29 CFR, Section 5.5 – Contract Provisions and Related Matters requires that these construction contracts contain certain clauses, including minimum wage rate requirements and the submission of certified payrolls. Provisions included in 29 CFR, Section 5.5(a)(3)(ii) state, in part, that “(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls… (B) Each payroll submitted shall be accompanied by a “Statement of Compliance,” signed by the contractor or subcontractor.” Condition: Our review of expenditures charged to the ESSER program revealed that the School District entered into construction contracts in excess of $2,000; however, appropriate provisions were not included in the contracts to ensure that Wage Rate Requirements were met by the contractors. In addition, while it was later noted that the appropriate wage rate was paid to all laborers, the School District did not ensure that the contractor submitted the required certified payrolls, which includes a copy of payroll disbursements and a statement of compliance with Wage Rate Requirements, at least weekly during the construction period. Cause: The School District did not appropriately communicate the wage rate requirements to ensure certified payrolls were obtained weekly for each week in which work was performed. Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that appropriate provisions are included in contracts associated with construction financed in part or in whole with federal funds may expose the School District to unnecessary financial strains and shortages as ED or GaDOE may require the School District to return funds associated with these construction expenditures. Recommendation: The School District should develop policies and procedures to ensure that all construction contracts financed by federal financial assistance reflect appropriate provisions associated with Wage Rate Requirements and that certified payrolls are obtained from contractors as necessary. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding

FA 2024-002 Improve Internal Control Activities Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants COVID-19 – 84.027 – American Rescue Plan – Special Education Grants to States COVID-19 – 84.173 – American Rescue Plan – Special Education Preschool Grants Federal Award Numbers: H027A220073 (Year: 2023), H027A230073 (Year: 2024), H173A220081 (Year: 2023), H173A230081 (Year: 2024), H027X210073 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures recorded in and related to the Special Education Cluster revealed that the School District’s internal control procedures were not designed appropriately to ensure that appropriate reviews and approvals occurred. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). SEC funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. SEC funds totaling $993,921.19 were expended and reported on the Meriwether County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. 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. Condition: Internal controls over various compliance requirements associated with SEC were reviewed by the auditors. During our testing, it was determined the School District’s internal controls were not properly designed as it was discovered that the SEC Bookkeeper was using a stamp of the Program Director’s signature for approval of payment in the Director’s absence. Cause: The deficiency resulted from a lack of awareness that the existence of a stamp bearing the Director's signature could compromise separation of duties controls. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to adequately review expenditures for allowability exposes the School District to unnecessary risk of error and misuse of federal funds. Recommendation: The School District should review current internal control procedures related to the SEC programs. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect appropriate evidence of review for associated compliance requirements. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding. Appropriate review and approval procedures have been consistently followed throughout the expenditure approval process. The use of a signature stamp did not compromise the Director’s thorough review and authorization of expenditures. Under the established process, the Bookkeeper initiates approval by sending a detailed email to the Director. The signature stamp was applied only after the Director responded with explicit approval. Additionally, a printed copy of the Director’s email approval was attached to the corresponding invoice, which the Accounts Payable Clerk verified prior to processing payment. This procedure has been in place and closely monitored to ensure compliance. A sample of this process was provided as evidence to the reviewing auditor during the review. Auditor’s Concluding Remarks: The use of a signature stamp constitutes a significant control weakness and raises concerns regarding the integrity and authenticity of transaction approvals. This practice does not provide an adequate audit trail related to the expenditure approval process and increases the risk of unauthorized approvals and fraudulent transactions. We reaffirm our finding and will review the status of the finding during our next audit.

FA 2022-001 Improve Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425D210012 (Year: 2021) Questioned Costs: $119,600 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $6,932,136 were expended and reported on the Meriwether County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. 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 200.403 ? Factors Affecting Allowability of Costs state that ?costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 200.404 ? Reasonable Costs state that ?a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award? (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations? for the acquisition of property or services required under a Federal award or subaward?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that a payment was made to the staffing company utilized by the School District to provide bonuses to paraprofessional contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private staffing company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon rates. Furthermore, the School District does not have the authority or ability to retain these individuals as they were not employees of the School District and contract provisions requiring the individuals to remain employed by the staffing company and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $119,600 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $119,600 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and no deficiencies were noted during the 2022-2023 Federal Review performed by GaDOE. Earlier in the year, a contract amendment had been drawn up to pay for ?retention incentives? to contracted workers, and the staffing company sent correspondence to the School District stating no other addendum was required. The School District was not aware that an additional contract amendment should be initiated prior to the expenditure of funds to pay for an additional bonus payment. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding. FA 2022-001 Improve Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425D210012 (Year: 2021) Questioned Costs: $119,600 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $6,932,136 were expended and reported on the Meriwether County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. 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 200.403 ? Factors Affecting Allowability of Costs state that ?costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented?? In addition, provisions included in the Uniform Guidance, Section 200.404 ? Reasonable Costs state that ?a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award? (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost.? Furthermore, provisions included in the Uniform Guidance, Section 200.318 ? General Procurement Standards state that ?the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations? for the acquisition of property or services required under a Federal award or subaward?? Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that a payment was made to the staffing company utilized by the School District to provide bonuses to paraprofessional contractors who were not employees of the School District. These individuals were assigned to work within the School District by the private staffing company. Per review of the contract in place during the fiscal year under review, it was noted that these bonuses represented amounts in excess of the agreed upon rates. Furthermore, the School District does not have the authority or ability to retain these individuals as they were not employees of the School District and contract provisions requiring the individuals to remain employed by the staffing company and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $119,600 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $119,600 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District?s policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and no deficiencies were noted during the 2022-2023 Federal Review performed by GaDOE. Earlier in the year, a contract amendment had been drawn up to pay for ?retention incentives? to contracted workers, and the staffing company sent correspondence to the School District stating no other addendum was required. The School District was not aware that an additional contract amendment should be initiated prior to the expenditure of funds to pay for an additional bonus payment. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District?s purchasing policies and procedures. 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 equipment and real property management as it relates to the Child Nutrition Cluster. Criteria: 2 CFR 200.313(d)(1) states, "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. Condition: The following deficiency was noted when reviewing the Child Nutrition Cluster equipment listing: ? Property records did not include the following required components for 86 equipment items: (1) The source of funding for the property (including the FAIN), (2) who holds title, (3) the acquisition date, (4) cost of the property, and (5) use and condition of the property. Cause: In discussing this deficiency with the School District, they stated these issues were a result of turnover at the School District. Effect or Potential Effect: Failure to maintain a complete and accurate equipment listing exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. 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 Views of Responsible Officials: We concur with this finding.

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