Crane Elementary School District No. 13

Finding Number: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Education Stabilization Fund Assistance Listing Number: 84.425U Federal Agency: U.S. Department of Education Federal Award Number: S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Equipment and Real Property Management Criteria Under 2CFR §200.313, the District is required to maintain property records 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  District  did  not  ensure  all  asset  additions  charged  to  the  Education  Stabilization  Fund  were  included in the capital asset listing. Cause The  District  did  not  have  sufficient  review  procedures  in  place  to  ensure  federally‐funded  capital  assets were included in the capital asset listing. Effect The District did not initially comply with the equipment and real property management requirements of the grant. As a result of auditor inquiry, management updated the capital asset listing to include the federally‐funded capital asset project. Context The  District  utilized  $485,801  of  Education  Stabilization  Funds  for  HVAC  upgrades,  but  failed  to  include the project in the initial capital asset listing provided to auditors. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should allocate the necessary resources to implement controls and review procedures over capital asset schedules to ensure they are prepared accurately. Specifically, the District controls should  include  a  review  of  federally‐funded  projects  to  determine  if  they  have  been  properly  reflected in the year‐end capital asset listing. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2023‐002 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Agency: U.S. Department of Education Federal Award Number: S425D210038, S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Criteria Education Stabilization Fund grant recipients are required to submit an annual performance report with data on expenditures, planned expenditures, subrecipients, and uses of funds. The District, as a subrecipient  of  the  Arizona  Department  of  Education  (ADE),  fulfills  this  requirement  through  completion of ADE's LEA Uses of ESSER I, II & III Report (ESSER Report). Condition The District did not maintain adequate supporting documentation for various data included in the ESSER Report submitted to ADE. Cause The  District  did  not  have  sufficient  review  procedures  in  place  to  ensure  the  ESSER  Report  was  sufficiently supported, and/or did not maintain documentation utilized when the ESSER Report was prepared. Effect The District was unable to accurately and fully support the data submitted on the ESSER Report. Context The data maintained by the District to support the allocation of costs to specific object codes and expenditure categories  for  ESSER  II  and  ESSER  III  did  not  agree  to  the  amounts  reported  to  ADE.  However, the total amounts expended for ESSER II and ESSER III were consistent with the District's accounting records. Additionally, the full time equivalent (FTE) amount submitted did not agree with District records. Recommendation The District should ensure that accurate federal reports are prepared and that proper supporting documentation is maintained for all amounts indicated on such reports. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2022-001 Repeat Finding: No Program Name/Assistance Listing Title: COVID-19 Education Stabilization Fund Assistance Listing Number: 84.425D Federal Agency: U.S. Department of Education Federal Award Number: S425D210038 Pass-Through Agency: Arizona Department of Education Questioned Costs: $233,091 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles CRITERIA Under 2CFR ?200.303, the District is required to establish and maintain effective internal controls over federal awards to provide reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, section 313(d) of the CRRSA Act and ESEA section 7013(3), 20 U.S.C 7713(3), authorize the use of Education Stabilization Funds for construction activities, including the debt service for such construction activities. CONDITION The District did not ensure that all debt service payments charged to the Education Stabilization Fund were related to construction expenditures incurred. CAUSE The District did not have adequate internal controls in place to ensure that only eligible debt service costs were charged to the program. EFFECT The District charged unallowable costs to the program. CONTEXT During fiscal year 2020-21, the district obtained financing of $1,160,000 to help fund the costs of various building improvements related to indoor air quality and filtration. According to construction invoices on file at the District, $233,091 of the original financing was not utilized on the building improvements and was still available for spending as of fiscal year end 2021-22. During fiscal year 2021-22, the District utilized $1,165,481 of Education Stabilization Funds to pay off the financing agreement, consisting of outstanding principal and accrued interest. As $233,091 of the original financing has yet to be expended, that portion of the debt service payoff is considered an unallowable cost to the program. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION Management should review transactions and ensure that program costs are allowable and in adherence to applicable federal requirements. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.

Finding Number: 2021-001 Repeat Finding: No Program Name/Assistance Listing Title: COVID-19 Coronavirus Relief Fund Assistance Listing Number: 21.019 Federal Agency: U.S. Department of Treasury Federal Award Number: ERMT-21-2176 Pass-Through Agency: Arizona Governor?s Office Questioned Costs: $179,129 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/ Cost Principals, Period of Performance CRITERIA Under 2CFR ?200.303, the District is required to establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes ensuring costs charged to the program occurred during the allowable time frame set by the federal agency and the pass-through agency, in this case, costs incurred between March 1, 2020 and December 30, 2020. CONDITION The District did not have adequate internal controls in place to ensure that only eligible costs were charged to the program. CAUSE Due to the nature of the program, the District moved existing costs to this program. When compiling the costs to be charged to the program, the District did not ensure that the date the costs were incurred were within the allowable time frame for the program. EFFECT The District charged unallowable costs to the program. CONTEXT The District charged estimated payroll expenditures of $179,129 to the program related to wages and benefits earned by employees from February 15, 2020 through February 29, 2020. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION Management should review all transactions to ensure the costs charged to the program occurred during the allowable time frame. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.