HEART BUTTE SCHOOL DISTRICT #1Local Government

2021-010 Coronavirus Relief Fund Reporting Compliance CFDA Number: Coronavirus Relief Fund Federal Award Number: 21.019 Federal Agency: U.S. Department of Treasury Pass-through Entity: Montana Governor's Office Condition: The District did not maintain and provide the Coronavirus Relief Fund (CRF) report submitted to the Montana Governor's Office for compliance testing. Context: During our testing of the CRF program, we requested the reports filed with the Montana Governor's Office. Criteria: Internal control procedures should be in place to ensure all required reports for grant funding are maintained and available for audit. Effect: We were unable to audit the required CRF reports for internal control review and compliance with program requirements. Cause: An inadequate system of internal control noted with regards to the maintenance of documentation related to report compliance. Recommendation: The District should establish an internal control procedure to ensure all reports submitted for grant funding are maintained and available.

FINDING NUMBER 2019-007 ? FEDERAL PROGRAM QUESTIONED COSTS/CODING: Federal Award Name: CFDA# Amount Award Number Year School Improvement Grant SIG 84.377A $32,306 03712268219 2019 Title VII (Indian Education) 84.060 29,836 S060A180383 2019 Impact Aid 84.041 33,710 S041B-2019-2878 2019 Criteria: The Office of Management & Budget (OMB) Uniform Guidance requires adequate documentation for each federal program. Questioned costs are costs that at the time of the audit are not supported by adequate documentation for the auditor to determine whether the expenditure was proper for the grant, properly coded and properly reported. The District?s expenditure policy requires that proper documentation of expenditures be present prior to issuing warrants. Condition: Material Weakness over internal controls in federal program expenditure processing. The District is not in compliance with federal program requirements to obtain and retain proper supporting documentation of program expenditures. Proper expenditure documentation was missing on expenditures for three federal programs in excess of $25,000 and for four federal programs under $25,000. While the Impact Aid fund is able to be spent on any District expenditure, we were unable to determine whether the costs were actual District expenditures, and whether the coding reported was accurate due to missing supporting documentation. Context: Warrants were paid for federal expenditures of $90,726 in the Miscellaneous Fund and $33,710 in the Impact Aid fund totaling $124,436 without proper documentation of the expenditure to allow verification of whether the expenditure was for actual District purposes and whether the coding was accurately reported. Expenditures missing proper documentation by federal program as illustrated below: Miscellaneous Fund: Amount Title 1- Part A $ 7,102 School Improvement Grant SIG 32,306 Title VII (Indian Education) 29,836 Gear-Up 5,205 Title I - Part A (School Support) 12,420 Title IV- Part B (21st Century) 3,857 Subtotal Miscellaneous Fund $90,726 Impact Aid Fund $33,710 Total Federal Program Questioned Coding $124,436 Possible Effect: Expenditures may be reported in wrong functions in the audit report. Cause: The District did not properly assess its risks in expenditure processing. Proper checks and balances were not implemented to prevent this situation from occurring. There was an overall sense that it is not anyone?s job to chase the staff members down to obtain expenditure documentation. Recommendation: We recommend that the District enforce a policy that requires each staff member to turn in all receipts and invoices and that the District Clerk assure that all claims include proper documentation prior to presenting warrants to the Board for approval.

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