DESOTO INDEPENDENT SCHOOL DISTRICTLocal Government

Finding 2022-003 Maintenance of Effort (MOE) Federal Agency Name: U.S. Department of Education Program: Special Education Cluster (ALN 84.027 and 84.173) Type of Finding: Significant Deficiency in Internal Control Over Compliance and Noncompliance Compliance Requirement: Maintenance of Effort (MOE) Recurring Finding: No Criteria: Maintenance of Effort (MOE) requires local educational agencies to maintain the level of state and local funds they spend to support federal programs from one fiscal year to the next. The MOE requirement specifies that the District must spend at least the same amount of state and local funds to provide services to students with disabilities that the District spent in the previous fiscal year. The District must comply with the MOE requirement to receive IDEA-B funding each fiscal year (34 CFR ?300.203). Condition: The District was not in compliance with the maintenance of effort requirement for the fiscal year ended June 30, 2022. Cause: The District did not properly monitor the MOE requirement.

Finding #2020-008 ? CFDA 84.367A, ESEA Title II, Part A, Supporting Effective Instruction; A. Activities Allowed or Unallowed and B. Allowable Costs (Material Weakness) Criteria: In order for costs to be allowable, Uniform Guidance, 2 CRF part 200 requires costs charged to federal programs be necessary and reasonable for the performance of the federal program. Additionally, the costs must be adequately documented. Condition: Based on a non-statistical sample, we tested a total of eight (8) payroll transactions and a total of forty (40) nonpayroll transactions for a total sample of $120,613 and $30,901, respectively. We noted two (2) employees for the above program was improperly charged to the federal program. Although the error related to the employee improperly charged to the federal program was reported to the appropriate department when the discrepancy was noted, the change was not made in the accounting software. Additionally, we noted one (1) instance where an unallowable cost was charged to the federal program for a nonpayroll transaction. Cause: Employee was not properly classified in the District?s accounting system as a result of poor internal controls and adequate documentation not being maintained. There appears to be no review or monitoring process in place to ensure employees or other transactions are properly coded and documentation is maintained to support all charges. Effect: Total expenditures of $113,979 (payroll expenditures of $113,617 and nonpayroll expenditures of $362) of incurred for the year ended June 30, 2020, for the above program consisted of payments to an unallowed costs. Additionally, failure to meet the allowable cost requirements could potentially lead to loss or return of funding. Questioned Costs: Known questioned costs totaled $113,979. Repeat Finding: No Federal Awards Findings and Questioned Costs Recommendation: We recommend for the District establish procedures to ensure that employees are properly classified in the accounting system, expenditures are charged to the correct federal program, and to ensure documentation is maintained to support all charges. We recommend the District provide training to program personnel regarding allowable costs under program guidelines as well as costs principles. Views of Responsible Official: Management agrees with the Finding and see Corrective Action Plan.

Finding #2020-009 ? CFDA 84.165A, Academies for Academic Engagement and Excellence; B. Allowable Costs Criteria: In order for costs to be allowable, Uniform Guidance, 2 CRF part 200 requires costs charged to federal programs be necessary and reasonable for the performance of the federal program. Condition: Based on a non-statistical sample, we tested a total of a total of seventeen (17) payroll transactions for a total sample of $859,121. We noted one (1) employee for the above program was improperly paid and amounts were charged to the federal program incorrectly. Cause: Employee was overpaid for a stipend (totaling $714) and amounts charged to the federal program were charged incorrectly as a result of poor internal controls. Effect: Payroll expenditures incurred for the year ended June 30, 2020, for the above program consisted of over payments to an employee. Additionally, failure to meet the allowable cost requirements could potentially lead to loss or return of funding. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend for the District establish procedures to ensure that employees are properly classified in the accounting system and to ensure documentation is maintained to support all charges. We recommend the District provide training to program personnel regarding allowable costs under program guidelines as well as costs principles. Views of Responsible Official: Management agrees with the Finding and see Corrective Action Plan.

Finding #2020-010 ? CFDA 84.367A ESEA Title II, Part A, Supporting Effective Instruction; A. Activities Allowed or Unallowed and B. Allowable Costs Criteria: In order for costs to be allowable, Uniform Guidance, 2 CRF part 200 requires costs charged to federal programs be necessary and reasonable for the performance of the federal program. Additionally, the costs must be adequately documented. Accordingly, charges to federal awards for salaries and wages be based on payroll documented in accordance with generally accepted practice of the governmental unit. A semi-annual certification can be used to support charges for single cost objectives and should be signed after the work has been performed by either the employee or a supervisor having firsthand knowledge of the work performed. Payroll activity reports must be used to support charges for multiple cost objects. Condition: Title II, Part A ? From a sample of eight (8) payroll transactions totaling $120,613, documentation supporting the expenditure was allowable for the federal program was not able to be provided for all employees that were selected for testing. Cause: Adequate documentation of approval in the District?s accounting system as a result of poor internal controls is not being maintained. There appears to be no process in place to ensure appropriate documentation is maintained to support all charges. Effect: Failure to meet the allowable cost requirements could potentially lead to loss or return of funding. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend for the District Management should assign an individual responsible for ensuring semi-annual certifications and other appropriate time and effort documentation are properly maintained. Views of Responsible Official: Management agrees with the Finding and see Corrective Action Plan.

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