Perry Independent School DistrictLocal Government

ACCOUNTS PAYABLE – FEDERAL GRANTS CFDA Number and Title: CFDA # 84.425U – Education Stabilization Funds ARP-ESSER III (ESF) Federal Award ID Number: 200021795YR1 Federal Agency: U.S. Department of Education Compliance Requirement: Activities Allowed, Cash Management Pass-Through Entity: Oklahoma Department of Education Repeat Finding from Prior Audit: No Condition: During the review of the ESF expenditure claims, we observed large purchases made to Cimarron Technology Services, LLC (see Finding 2023-5). The vendor invoiced the District for a wide range of IT related purchases and services that included iPads, chrome books, laptops, supplies, security cameras, monthly on-site IT services, and more. The invoices from this vendor were vague in nature and lacked appropriate detail for the goods and services provided. There were no specific model or serial numbers included with the invoices, therefore, we were unable to verify what products were actually received. We learned that the former superintendent was the primary contact with this vendor and management override existed as this employee initiated the purchase request, delivered payment to the vendor, and served as the receiving agent for goods and services. The District made approximately $180,700 in ESF payments to this vendor during the 2022-23 fiscal year. Criteria: Compliance with Federal Allowable Activities and Cash Managements Requirements requires the District to establish and maintain effective internal control over compliance with requirements applicable to federal program allowable activities and cash management. Cause / Effect: There was a management override over the accounts payable function for the general fund purchases. This increases the risk that a misappropriation of assets will occur and not be detected whether due to error or fraud. There is no evidence that the District received the appropriate goods or services for which they paid approximately $180,700 in ESF APR-ESSER III funds to a vendor. Questioned Costs: The payments made to Cimarron Technology and reimbursed with federal funds are identified questioned costs of $180,700. Recommendation: We recommend that the District enforce its current procedures and implement new procedures immediately to address the aforementioned conditions. We recommend that the District enforce policies and procedures which require that purchase orders be encumbered prior to the obligation being incurred, proper approval of the expenditure, original documentation be obtained, invoices be signed as received, the face of the purchase order reflect the total amount actually paid, and the check number(s) be recorded on the purchase order. In addition, an annual contract for these services should be approved by the Board of Education and signed by both the Board and the vendors providing the goods or services for material amounts. Payments should not be approved until the vendor has provided sufficient evidence that the goods and serviced were received. This evidence should consist of detailed invoices. Further, a proper segregation of duties should exist between the individuals initiating the purchase request, paying the invoice, and receiving the goods/services.

21-02 Finding Statement of Condition ? The District reported expenditures for federal programs, through the Oklahoma Cost Accounting System (OCAS), that exceeded allocations during the 2020-21 fiscal year. Criteria ? Good internal control requires procedures to be in place for effective oversight and to properly record and track federal program expenditures and revenues. The applicable expenditures utilized by the District for several program allocations were not the same as reported to the State Department of Education and the Oklahoma Cost Accounting System (OCAS) as follows: Federal Program Applicable Program Program Expenditures Expenditures Reported on OCAS Title II - Part A Recruit $ 22,651.11 $ 25,435.93 Title V - Sub PT 2 $ 33,558.91 $ 33,477.80 IDEA-B Flow Through $218,331.47 $218,130.51 RUS Distance Learning & Medicine Grant $ 63,331.00 $ 0.00 ESSER F / CARES Relief $126,090.00 $132,305.76 ESSER II Set Aside $ 41,071.19 $ 45,002.07 Proper coding is required in order to track the District's actual federal expenditures associated with each program. Cause/Effect of Condition ? Lack of internal control allows for non-compliance with expenditure tracking and over statements in reporting to State and Federal Agencies. Recommendation ? All federal program funding is to be tracked utilizing the prescribed OCAS expenditure and revenue project code numbers. Those codes are to be utilized only for the amount the District is allocated for federally funded program.

Statement of Conditions ? The District reported expenditures for federal programs, through the Oklahoma Cost Accounting System (OCAS), that exceeded allocations during the 2019-20 fiscal year. Criteria ? Good internal control requires procedures to be in place for effective oversight and to properly record and track federal program expenditures and revenues. The applicable expenditures utilized by the District for several program allocations were not the same as reported to the State Department of Education and the Oklahoma Cost Accounting System (OCAS) as follows: Applicable Program Program Expenditures Federal Program Expenditures Reported on OCAS Title IV, Part F PK School Climate Proj. $ 2,382.45 $ 1,404.04 RUS Distance Learning & Medicine Grant $ 71,413.00 $ 0.00 National School Lunch Program $ 151,382.32 $ 175,052.54 School Breakfast Program $ 65,226.30 $ 67,678.28 Additionally, Title IV Part A SSAE, Project 552 had an allocation of $30,000.00, with no coded expenditures, while Title IV Part a SSAE, Project 551 did not have an allocation but coded $19,952.33 of expenditures. Proper coding is required in order to track the District?s actual federal expenditures associated with each program. Cause/Effect of Condition ? Lack of internal control allows for non-compliance with expenditure tracking and over statements in reporting to State and Federal Agencies. Recommendation ? All federal program funding is to be tracked utilizing the prescribed OCAS expenditure and revenue project code numbers. Those codes are to be utilized only for the amount the District is allocated for federally funded program.