Pryor School District No. 2 & 3

Finding 2023-003 – Reporting - Compliance (Repeat Finding: 2022-008, 2021-006) Significant Deficiency Condition: The School District did not complete and submit their audit to the Federal Audit Clearinghouse by the due date of March 31, 2024. Questioned Costs: None. Criteria: 2 CFR §200.512 of the Uniform Guidance requires an entity expending more than $750,000 of federal funds within the calendar year to submit a data collection form and reporting package by a due date that is the earlier of 30 calendar days after receipt of the auditor’s report(s) or nine months after the end of the audit period. Cause: During FY 2020-21, 2021-22, and 2022-23 the School District employed multiple Business Managers. This affected providing documentation in a timely manner. Effect: Late filing of the data collection form results in noncompliance with requirements of Uniform Guidance which could lead to sanctions by funding agencies. Recommendation: We recommend the School District become familiar with reporting requirements for each award and implement procedures to begin audit preparation work earlier in the fiscal year to ensure reports are filed within the nine-month reporting deadline set forth by Uniform Guidance. Views of Responsible Officials: Please refer to the Corrective Action Plan for management’s views and planned corrective action.

Finding 2022-006 – Internal Control Over Disbursements for Allowable Costs/Activities (Repeat Finding: 2021-007, 2020-007) Material Weakness AL Number: 84.425 Education Stabilization Fund Condition: During our testing of internal controls over nonpayroll disbursements we reviewed 10 transactions, noting there was no supporting documentation for 2 transactions. No additional documentation was present to show that approval was obtained through other means, such as by email, verbally or follow-up signature approval from the program director. The sampling was not a statistically valid sample. Questioned Costs: None. Criteria: Internal controls should be in place that provide reasonable assurance that all financial transactions are reviewed and approved before payments are made and reports generated. No one individual should handle a transaction from its inception to its completion. Cause: Inattention to the procedures already in place to ensure that all transactions are properly authorized by appropriate personnel signing approvals before payment is issued may have led to this finding. Effect: Inadequate internal controls over disbursements could adversely affect the School District’s ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by employees in the normal course of performing their assigned functions. Recommendation: We recommend that the School District strengthen its internal control policies and procedures over expenditures and employees indicate their review and approval for all transactions to ensure they are properly authorized.Views of Responsible Officials: Please refer to the Corrective Action Plan for management’s views and planned corrective action.

Finding 2022-007 – Internal Control Over Credit Card Expenditures for Allowable Costs/Activities (Repeat Finding: 2021-008, 2020-008) Material Weakness AL Number: 84.041 Impact Aid Condition: During our testing of internal controls over credit card expenditures we reviewed 27 transactions, noting there was no supporting documentation for 8 transactions. No additional documentation was present to show that approval was obtained through other means, such as by email, verbally or follow-up signature approval from the program director. The sampling was not a statistically valid sample. Questioned Costs: None. Criteria: Internal controls should be in place that provide reasonable assurance that all credit card transactions are reviewed and approved before payments are made and reports generated. Credit card usage should be limited to authorized staff for authorized purposes. No one individual should handle a transaction from its inception to its completion. Cause: Inattention to the procedures already in place to ensure that all transactions are properly authorized by appropriate personnel signing approvals before payment is issued may have led to this finding. Effect: Inadequate internal controls over credit card usage could adversely affect the School District’s ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by employees in the normal course of performing their assigned functions. Recommendation: We recommend that the School District strengthens internal control policies and procedures over credit card usage and employees indicate their review and approval for all transactions to ensure they are properly authorized. Views of Responsible Officials: Please refer to the Corrective Action Plan for management’s views and planned corrective action.

Finding 2022-008 – Reporting (Compliance; Internal Control Over Compliance) Significant Deficiency AL Number: 84.041 Impact Aid AL Number: 84.425 Education Stabilization Fund Condition: The School District did not complete and submit their audit to the Federal Audit Clearinghouse by the due date of March 31, 2023. Questioned Costs: None. Criteria: 2 CFR §200.512 of the Uniform Guidance requires an entity expending more than $750,000 of federal funds within the calendar year to submit a data collection form and reporting package by a due date that is the earlier of 30 calendar days after receipt of the auditor’s report(s) or nine months after the end of the audit period. Cause: During FY 2020-21 and 2021-22 the School District employed multiple Business Managers. This affected providing documentation in a timely manner. Effect: Late filing of the data collection form results in noncompliance with requirements of Uniform Guidance which could lead to sanctions by funding agencies. Recommendation: We recommend the School District become familiar with reporting requirements for each award and implement procedures to begin audit preparation work earlier in the fiscal year to ensure reports are filed within the nine-month reporting deadline set forth by Uniform Guidance. Views of Responsible Officials: Please refer to the Corrective Action Plan for management’s views and planned corrective action.

Internal Controls over Expenditures for Allowable Cost/Activities Allowed Federal program information: Funding agency: U.S. Department of Education Title: Impact Aid AL number: 84.041 Award year and number: 2021, S041B-2020-2904 Criteria or Specific Requirement: Effective Internal Controls over expenditures should be properly designed to provide assurance of meeting compliance requirements and should operate effectively. The District's purchasing policies and procedures state, "That all purchases require a purchase requisition approved by the Superintendent". Condition: Purchase Requisitions are not being properly filled and/or approved by the Superintended for each expenditure. In addition, proper documentation is not being retained regarding expenditure transactions. Context: We noted the following deficiencies with major program expenditures: a) Purchase Requisitions should be used to request approval for expenditures and signed by the Superintendent. Out of the forty-two Major Program Expenditure Samples tested, five were missing the requisition form or the superintendent's signature approving the requisition totaling $1,987. It was determined the items were allowable under the grant. b) Invoices were unable to be provided to support the transaction for one of the fortytwo transactions selected for testing totaling $3,600. It was determined the items were allowable under the grant. We tested a sample of forty-two transactions totaling $19,807 from a total population of seven hundred thirty three transactions totaling $546,522 for the period under audit for the grant. This testing was performed using a non-statistical sample because sampling risk was not quantified. Questioned Costs: None Effect: The lack of effective control over expenditure requisition approval could lead to misappropriation of federal funds. Cause: Proper internal controls are circumvented to expedite the claims payment process. Repeat: Yes - Years as Repeat Finding: Three 2020-007, 2019-004 and 2018-005. Auditor's Recommendation: The District should create an approved vendor list for reoccurring expenditures and all other expenditures should include an approved requisition form and purchase orders where applicable. Views of Responsible Officials: The District concurs with the finding.

Internal Controls and Compliance over Credit Card Expenditures for Allowable Cost/Activities Allowed Federal program information: Funding agency: Department of Education Title: Impact Aid AL number: 84.041 Award year and number: 2021, S041B-2020-2904 Criteria or Specific Requirement: Effective Internal Controls over credit card expenditures should be properly designed to provide assurance of meeting compliance requirements and should operate effectively. Condition: Of the three months selected for testing across nine credit card accounts, the District was unable to provide support and statements for two of the months selected for testing for all nine credit cards. Furthermore, the District was unable to provide purchase authorization for an additional thirteen transactions totaling $3,855. It was determined the thirteen transactions tested without proper authorization were allowable under the grant. Context: We had a discussion with the superintendent and accounting staff and performed a walkthrough over the expenditure process, including credit card transactions. Questioned Costs: None Effect: Without effective internal controls over credit card expenditures, the potential for misstatement due to error or fraud occurring and not being detected greatly increases. Cause: Management did not assign priority to implementing effective internal controls over the credit card expenditure process. There is a lack of monitoring of funds being spent with credit cards. Repeat: Yes - Years as Repeat Finding: One -2020-008. Auditor's Recommendation: We recommend the District strengthen its internal control structure by following the policies and procedures to ensure compliance over expenditures. The District should provide training to management and staff to further their knowledge on internal controls and compliance requirements. Views of Responsible Officials: The District concurs with the finding.

Internal Controls and Compliance over Payroll for Allowable Costs/Activities Allowed Federal program information: Funding agency: Department of Education Title: Impact Aid AL number: 84.041 Award year and number: 2021, S041B-2020-2904 Criteria or Specific Requirement: Effective Internal Controls over payroll should be properly designed to provide assurance of meeting compliance requirements and should operate effectively. The District's payroll policies and procedures state that each employee's contract should be signed by the board and the employee. Condition: Of the forty-two samples tested, fourteen contracts were missing. Context: We had a discussion with the Business Manager and performed a walkthrough on payroll procedures. Payroll testing was performed as a dual test for Compliance and Internal Control Effectiveness as the majority of payroll is paid out of the Impact Aid fund. The samples are not statistically valid samples because sampling risk was not quantified. Questioned Costs: None Effect: Without effective internal controls over payroll, the potential for misstatement due to error or fraud occurring and not being detected greatly increases. Cause: Management did not assign priority to implementing effective internal controls over the payroll process. Employees are working without valid contracts. Repeat: Yes - Years as Repeat Finding: Three 2020-010, 2019-005, 2018-005 Auditor's Recommendation: We recommend the District strengthen its internal control structure by following the policies and procedures manual with regards to payroll. The District should provide training to management and staff to further their knowledge on internal controls and compliance requirements. Views of Responsible Officials: The District concurs with the finding.

Internal Controls over Expenditures for Allowable Cost/Activities Federal program information: Funding agency: U.S. Department of Education Title: Impact Aid CFDA number: 84.041 Award year and number: 2020, S041B-2020-2904 Criteria or Specific Requirement: Effective Internal Controls over expenditures should be properly designed to provide assurance of meeting compliance requirements and should operate effectively. The District's purchasing policies and procedures state, "That all purchases require a purchase requisition approved by the Superintendent". Condition: Purchase Requisitions are not being properly filled and/or approved by the Superintended for each expenditure. In addition, proper documentation is not being retained regarding expenditure transactions. Context: We noted the following deficiencies with major program expenditures: a) Purchase Requisitions should be used to request approval for expenditures and signed by the Superintendent. Out of the forty-two Major Program Expenditure Samples tested, eight were missing the requisition form or the superintendent's signature approving the requisition totaling $4,881. b) Invoices were unable to be provided to support the transaction for four of the fortytwo transactions selected for testing totaling $4,665. This testing was performed using a non-statistical sample. Questioned Costs: None Effect: The lack of effective control over expenditure requisition approval could lead to misappropriation of federal funds. Cause: Proper internal controls are circumvented to expedite the claims payment process. Repeat: Yes - Years as Repeat Finding: Two 2019-004 and 2018-005. Auditor's Recommendation: The District should create an approved vendor list for reoccurring expenditures and all other expenditures should include an approved requisition form and purchase orders where applicable. Views of Responsible Officials: The District concurs with the finding.

Internal Controls over Credit Card Expenditures for Allowable Cost/Allowable Activity Federal program information: Funding agency: Department of Education Title: Impact Aid CFDA number: 84.041 Award year and number: 2020, S041B-2020-2904 Criteria or Specific Requirement: Effective Internal Controls over credit card expenditures should be properly designed to provide assurance of meeting compliance requirements and should operate effectively. Condition: Of the three months selected for testing across five credit card accounts, the District was unable to provide support and statements for two of the months selected for testing. Furthermore, the District was unable to provide purchase authorization for an additional nine transactions totaling $975. Context: We had a discussion with the superintendent and accounting staff and performed a walkthrough over the expenditure process, including credit card transactions. The samples are not statistically valid samples. Questioned Costs: None Effect: Without effective internal controls over credit card expenditures, the potential for misstatement due to error or fraud occurring and not being detected greatly increases. Cause: Management did not assign priority to implementing effective internal controls over the credit card expenditure process. There is a lack of monitoring of funds being spent with credit cards. Repeat: No Auditor's Recommendation: We recommend the District strengthen its internal control structure by following the policies and procedures to ensure compliance over expenditures. The District should provide training to management and staff to further their knowledge on internal controls and compliance requirements. Views of Responsible Officials: The District concurs with the finding.

Internal Controls over Travel Expenditures for Allowable Costs/Activities Federal program information: Funding agency: U.S. Department of Education Title: Impact Aid CFDA number: 84.041 Award year and number: 2020, S041B-2020-2904 Criteria or Specific Requirement: Effective Internal Controls over expenditures should be properly designed to provide assurance of meeting compliance requirements and should operate effectively. The District's purchasing policies and procedures state, "That all purchases require a purchase requisition approved by the Superintendent". Condition: During our testing of travel expenditures, we noted that the District was unable to provide any support for four transactions totaling $722, and authorization for six transactions totaling $1,862. Context: We performed a walkthrough of expenditure transactions and selected forty transactions to test for federal compliance totaling $9,866. This testing was performed using a non-statistical sample. Questioned Costs: None. Effect: The lack of effective control over expenditure requisition approval could lead to misappropriation of federal funds. Cause: Proper internal controls are circumvented to expedite the claims payment process. Repeat: Yes - Years as Repeat Finding: Two 2019-004, 2018-005 Auditor's Recommendation: The District should create an approved vendor list for recurring expenditures and all other expenditures should include an approval requisition form and purchase order where applicable. Views of Responsible Officials: The District concurs with the finding.

Internal Controls over Payroll for Allowable Costs/Allowable Activities Federal program information: Funding agency: Department of Education Title: Impact Aid CFDA number: 84.041 Award year and number: 2020 S041B-2020-2904 Criteria or Specific Requirement: Effective Internal Controls over payroll should be properly designed to provide assurance of meeting compliance requirements and should operate effectively. The District's payroll policies and procedures state that each employee's contract should be signed by the board and the employee. Condition: Of the forty-two samples tested, fourteen contracts were missing, and six were either not signed by the board or the employee totaling $4,652. Context: We had a discussion with the Business Manager and performed a walkthrough on payroll procedures. Payroll testing was performed as a dual test for Compliance and Internal Control Effectiveness as the majority of payroll is paid out of the Impact Aid fund. The samples are not statistically valid samples. Questioned Costs: None Effect: Without effective internal controls over payroll, the potential for misstatement due to error or fraud occuring and not being detected greatly increases. Cause: Management did not assign priority to implementing effective internal controls over the payroll process. Employees are working without valid contracts. Repeat: Yes - Years as Repeat Finding: Two 2019-005, 2018-005 Auditor's Recommendation: We recommend the District strengthen its internal control structure by following the policies and procedures manual with regards to payroll. The District should provide training to management and staff to further their knowledge on internal controls and compliance requirements. Views of Responsible Officials: The District concurs with the finding.

Criteria or Specific Requirement: Effective Internal Controls over expenditures should be properly designed to provide assurance of meeting compliance requirements and should operate effectively. The District's purchasing policies and procedures state, "That all purchases require a purchase requisition approved by the Superintendent". Condition: Purchase Requisitions are not being properly filled and/or approved by the Superintended for each expenditure. Context: Purchase Requisitions should be used to request approval for expenditures and signed by the Superintendent. Out of the 40 Major Program Expenditure Samples tested, 12 were missing the requisition form or the superintendent's signature approving the requisition. This testing was performed using a non-statistical sample. Questioned Costs: None Effect: The lack of effective control over expenditure requisition approval could lead to misappropriation of federal funds. Cause: Proper internal controls are circumvented to expedite the claims payment process. Repeat: Yes - Years as Repeat Finding: One - 2018-005 Auditor's Recommendation: The District should create an approved vendor list for reoccurring expenditures and all other expenditures should include an approved requisition form and Purchase Order where applicable.

Criteria or Specific Requirement: Effective Internal Controls over payroll should be properly designed to provide assurance of meeting compliance requirements and should operate effectively. The Districts payroll policies and procedures state that each employee's contract should be signed by the board and the employee. Condition: Of the 30 payroll samples tested, 8 contracts were missing either board or employee signatures. Context: We had a discussion with the superintendent and accounting staff and performed a walkthrough over the payroll process. Payroll Testing was performed as a dual test for Compliance and Intern Control Effectiveness as the majority of payroll is paid out of Impact Aid Funds. The samples are not statistically valid samples. Questioned Costs: None Effect: Without effective internal controls over payroll, the potential for misstatement due to error or fraud occurring and not being detected greatly increases. Cause: Management did not assign priority to implementing effective internal controls over the payroll process. Employees are working without valid contracts. Repeat: Yes - Years as Repeat Finding: One - 2018-005 Auditor's Recommendation: We recommend the District strengthen its internal control structure by following the policies and procedures to ensure compliance over payroll. The District should provide training to management and staff to further their knowledge on internal controls and compliance requirements.

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