QUITMAN SCHOOL DISTRICT

2024-001. Internal Control APPLICABLE MAJOR FEDERAL PROGRAMS: U.S. DEPARTMENT OF AGRICULTURE PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION CHILD NUTRITION CLUSTER - AL NUMBERS 10.553 and 10.555 PASS-THROUGH NUMBER 1203 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES - AL NUMBER 84.010A PASS-THROUGH NUMBER 1203 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 The internal control deficiencies identified in Finding 2024-001 noted in Section II Financial Statement Findings apply to these major federal programs. Financial statement finding 2024-001 detail below: Criteria: Internal control is a process consisting of five interrelated components - control environment, risk assessment, information and communication, control activities, and monitoring. Management is responsible for adopting sound accounting policies and for establishing and maintaining internal control that will, among other things, initiate, authorize, record, process, and report transactions (as well as events and conditions) consistent with management's assertions embodied in the financial statements. Condition and Context: Deficiencies in the internal control component of control activities adversely affected the District’s ability to initiate, authorize, record, process, and report financial data in accordance with the regulatory basis of accounting such that there was a reasonable possibility that a material misstatement of the District’s financial statements would not be prevented, or detected and corrected on a timely basis. Financial accounting duties were not adequately segregated among employees. Specifically, certain key weaknesses include the following: bank reconciliations of the primary operating account were prepared by the same employee responsible for the maintenance of accounting records; bank deposits were prepared by the same employee issuing receipts; payroll checks were prepared by the same employee responsible for changes to the payroll amounts; and accounts payable checks were prepared by the same employee responsible for entering invoices, without compensating controls. Repeat of finding 2023-001. Cause: District management, due to cost/benefit implications, which hindered the District's ability to adequately segregate financial accounting duties among employees, did not effectively address the deficiencies in internal control. Effect or potential effect: The District's ability to initiate, authorize, record, process, and report transactions consistent with management's assertions embodied in the financial statements, as well as the ability to safeguard District assets, was adversely affected by the identified weaknesses in the above internal control component. Recommendation: District management should adopt sound accounting policies and establish and maintain internal control that will initiate, authorize, record, process, and report transactions consistent with management's assertions embodied in the financial statements and that will safeguard District assets. Views of responsible officials: We concur with the recommendation and will implement corrective procedures to the extent possible.

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 AMERICAN RESCUE PLAN - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425U PASS-THROUGH NUMBER 1203 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 Allowable Costs/Costs Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR, part 200, part E - Costs Principles establishes principles and standards for determining allowable costs incurred by the District under federal awards. Such costs are to be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition: In our test of disbursements, we identified unallowable costs totaling $3,011 were paid from the COVID-19 American Rescue Plan - Elementary and Secondary School Emergency Relief Fund. These costs were the result of the District paying sales tax on projects paid from operating funds incurred prior to March 2020. Cause: Lack of internal controls and management oversight over program expenditures. Effect: Unallowable costs of $3,011 were paid from the COVID-19 American Rescue Plan - Elementary and Secondary Emergency Relief Fund. Questioned costs: The amount of questioned costs was $3,011. Context: An examination of 5 checks totaling $11,425 paid from the COVID-19 Elementary and Secondary School Emergency Relief Fund from a population of 47 checks totaling $933,883. Our sample was a statistically valid sample. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District will ensure guidance regarding proper controls over program expenditures.