Eagle Academy Public Charter SchoolNon-Profit

U.S. Department of Education AL 84.010A Title I, Basic Grants to Local Education Agencies AL 84.010A Title I, Part A - Investment in Schools 2 AL 84.367A Title II: Improving Teacher Quality State Grants AL 84.424A Title IV: Student Support and Academic Enrichment Grants Type of Finding – Noncompliance and Significant Deficiency over Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Payroll) Repeat Finding: No Condition During our tests of compliance for activities allowed or allowed and allowable costs/costs principles (payroll), the School was unable to provide the personnel action form for 4 out of 25 transactions randomly selected for testing. Additionally, 2 out of 25 the payroll transactions had instances the amounts charged to the federal program did not agree to the time and effort reporting and the associated payroll registers. Criteria In accordance with 2 CFR 200.430: (i) Standards for Documentation of Personnel Expenses (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to AM 413-60, Grant Documentation, Grant Manager/Program Manager/Director conducts ongoing monitoring and control of all reimbursement receipts and deposits until grant ends; as well as all program and sub-recipient (when applicable) documentation, to include: (1) program documentation; (2) timesheets; (3) deliverables; (4) activities; (5) vendor payments; (6) program data/charts/numbers; and (7) financial and compliance report. According to AM 413-61, Grant Management Financial Reporting, Grant Manager/Program Manager/Director maintains all documentation, either electronic or hard copy, for all Federally funded grants for the term of the grant for a minimum of seven years for review and audit by the granting agency or its designee. Cause The School did not maintain adequate internal controls over activities allowed and allowable costs/costs principles. Effect Unallowed payroll costs could be charged to federal grants. Recommendation Internal controls over financial reporting should be designed to prevent, detect or correct, errors in a timely manner. Without adequate controls, the School cannot provide reasonable assurance transactions charged to federal grants are accurate. Questioned Costs $6,385 Management’s Response The School agrees with the finding. See Schedule of Correction Action Plans. Auditor’s Conclusion: Finding remains as stated.

Condition During our audit, we identified several key accounts that had not been reviewed as of June 30, 2023. These accounts included: accounts receivable, revenue and long-term debt. As a result, the financial statements as of and for the year ended June 30, 2023, required additional time and analysis before the financial statements could be finalized and available for issuance. This also required audit adjustments that had a negative impact on net assets of $1,407,187. Criteria Per the Uniform Guidance, the School must maintain an adequate system of internal control over financial reporting in order to initiate, authorize, record, process and report financial data reliably in accordance with generally accepted accounting principles. Additionally, § 200.510 requires the auditee to prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. Cause The School does not have adequate internal controls over financial reporting in place to ensure supervisory review and analysis for certain key accounts on a timely basis. Effect The delay in completing account analysis for the financial statement accounts could allow for misstatements, errors and irregularities to go undetected. Recommendation We recommend the School continue to reinforce its processes and procedures to ensure reconciliations and account analysis are completed and reviewed by appropriate supervisory personnel. The School should ensure accurate interim and year-end financial statements. Questioned Costs None. Managements Response Management agrees with the finding. See Schedule of Correction Action Plans. Auditor’s Conclusion: Finding remains as stated.

Condition The School received funding under various grants during the year that were recorded as ESSER II and ESSER III. During our tests of compliance, it came to our attention that $83,398 of payroll costs charged to the ESSER II were also charged to ESSER III. Additionally, there were 9 of out 40 instances where costs were charged to the grant for hours that were not paid to the employee (unpaid leave). There was also 1 instance out of 40, where management was unable to provide the approved payrate for an employee selected for testing. Criteria Per the Uniform Guidance, the School must maintain an adequate system of internal control over financial reporting in order to initiate, authorize, record, process and report financial data reliably in accordance with generally accepted accounting principles. In accordance with 2 CFR 200.430: (i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Cause The School does not have adequate internal controls to document that adequacy of personnel expenses charged to its Federal programs and did not have a process to ensure costs charged to its Federal programs are not duplicated. Effect Unallowed non-payroll and payroll costs could be charged to Federal programs. Recommendation We recommend the School implement procedures to ensure only allowable costs incurred are charged to its Federal programs. Questioned Costs Unknown - $83,398 from sampled testing. Managements Response Management agrees with the finding. See Schedule of Correction Action Plans. Auditor’s Conclusion: Finding remains as stated.

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