WEST BONNER COUNTY SCHOOL DISTRICT 83Local Government

Criteria 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards require compliance with the provision of equipment management. These provisions require maintaining records of the property purchased including but not limited to source of the funding for the property, acquisition date and cost. The District should have internal controls designed to ensure compliance with those requirements. Condition During our testing, the District maintenance documentation did not include the source of the funding for the property. Thus, we were unable to verify any equipment inventory from prior years. Questioned costs None Context There were no equipment expenditures made with ESSER grants under the ESF program in the current year that would be subject to the equipment requirements. Cause The District had turnover in several key areas and lacked formalized, documented procedures and controls over inventory maintenance record documentation requirements. Potential effect of Condition The District was unable to provide documentation of compliance with the equipment requirements of the ESSER grant. Recommendation We recommend the District design procedures and controls to ensure that equipment requirements for federal grant programs are met and documented. Management’s Response The District concurs with the audit finding and is taking immediate steps to strengthen internal controls regarding federal equipment inventory. The following corrective actions will be implemented: • Collaboration & Compliance: The Business Office is currently working closely with the Federal Programs Director/Coordinator to ensure all federal compliance measures are rigorously met. • Inventory Tracking System: The Business Office has developed and implemented a robust inventory tracking and asset-tagging system to accurately monitor all items purchased with federal funds. At a minimum, the system will track item descriptions, physical locations, useful lives, and disposal dates. • Policy Review: The Board of Trustees will review and update current board policy to ensure full alignment with Uniform Guidance procurement and equipment standards. • Annual Oversight: The Federal Programs Director will maintain all inventory records and provide them in their entirety to the Business Manager at the end of each fiscal year. The Business Manager will conduct a comprehensive review of these records to verify accuracy and completeness.

2023-004: Education Stabilization Fund (ESF) Equipment Inventory Federal Agency: U.S. Department of Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425D & 84.425U Federal and State Award Identification Number and Year: S425D200043 - 2020, S425D210043 – 2021 & S425U210043 - 2021 Pass-Through Agency: Idaho Department of Education Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of equipment management. These provisions require maintaining records of the property purchased including but not limited to source of the funding for the property, acquisition date and cost. The District should have internal controls designed to ensure compliance with those requirements. Condition: During our testing, the District maintenance documentation did not include the source of the funding for the property. Thus we were unable to verify any equipment inventory from prior years. Questioned costs: None Context: There were a total of 26 equipment expenditures made with ESSER grants under the ESF program in the current year that would be subject to the equipment requirement. Cause: The District had turnover in several key areas and lacked formalized, documented procedures and controls over inventory maintenance record documentation requirements. Effect: The District was unable to provide documentation of compliance with the equipment requirements of the ESSER grant. Repeat Finding: No. Recommendation: We recommend the District design controls to ensure that equipment requirements for federal grant programs are met and documented. Views of responsible officials: There is no disagreement with the audit finding. All federal programs will have a federal programs director/coordinator and the Business Office will work closely with the federal programs director/coordinator to ensure that all federal compliance measures are met. The Business Office will develop and implement an accurate inventory tracking system for items purchased with federal funds. The board will review board policy to ensure it meets the uniform guidance as required for purchasing equipment with federal funds. Inventory records will be maintained by the federal program director and shared in entirety at the end of each fiscal year with the business manager. The business manager will review the inventory for accuracy and completeness. Inventory record management must track at a minimum the following: description of item, serial number or other identifying numbers, funding source, acquisition date, cost of the item, location of the item, disposal date and useful life. The tagging system will be developed to accurate track each inventory item within the district.

Federal Agency: U.S. Department of Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425D & 84.425U Federal and State Award Identification Number and Year: S425D200043 - 2020, S425D210043 – 2021 & S425U210043 - 2021 Pass-Through Agency: Idaho Department of Education Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria or specific requirement: Elementary and Secondary School Emergency Relief Fund (ESSER) grantees must submit an annual performance report. Subrecipients are to submit their data to the State Department of Education. The District should have internal controls designed to ensure compliance with those requirements. Condition: During our testing, the District was unable to provide copies or documentation of the required annual performance reports being submitted to the State Department of Education. Questioned costs: None Context: There were a total of three ESSER grants under the ESF program that required submission of the annual performance reports which District was unable to provide copies or documentation of the submission. Cause: The District had turnover in several key areas and lacked formalized, documented procedures and controls over reporting requirements. Effect: The District was unable to provide documentation of compliance with the reporting requirements of the ESSER grant. Repeat Finding: No. Recommendation: We recommend the District design controls to ensure that reporting requirements for federal grant programs are met and documented. Views of responsible officials: There is no disagreement with the audit finding. All federal programs will have a federal programs director/coordinator and the Business Office will work closely with the federal programs director/coordinator to ensure that all federal compliance measures are met. A calendar of all federal reporting requirements will be developed and maintained. This calendar will be reviewed monthly to ensure all federal compliance timelines are met. A federal program grant activity report will be shared monthly with the district leadership team. This report will keep financial monitoring to the forefront of the leadership team. All federal program reporting will be reviewed with the Business Office prior to submission. Business Office will complete federal program management and reporting training by December 31st by working with the federal program specialists at the State Department of Education and reading and retaining for future reference any grant specific guidance.

Condition - The District does not have formalized or documented procedures related to the accurate tracking, recording, reconciling or oversight of grant programs. In addition, there appears to be a lack of appropriate communication between those administering the grants and those responsible for the financial records. Criteria - Costs charged to federal programs are to be supported by adequate documentation in accordance with guidelines established in the OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly referred to as ?Uniform Guidance?). Furthermore, governmental accounting standards require that revenue for expenditure-driven grant programs be recognized when the District meets the eligibility requirements of the grant and the resources are considered to be available, and for the subsequent reimbursement requests to be submitted in a timely manner. When grant funds are received in advance, unearned revenue should be recorded until the costs have been incurred, eligibility requirements are met, or unexpended funds are returned to the granting agency. Effect - In connection with performing our audit testing, as described in other findings, it was discovered that the District struggled to accurately identify the correct expenditure amounts applicable to each grant, which resulted in several reimbursement requests not being submitted on a timely basis. In some instances, adjustments were required in order to properly remove eligible costs from the applicable grants due to the expiration of the available grant award. While there is no evidence that the District submitted requests for ineligible expenditures, it is apparent that the District did not submit for grant funds that they would have been entitled to had the submissions been completed timely. In addition, without adequate procedures in place, grant expenditures and revenue may not be properly identified, which could result in noncompliance with the grant requirements or Uniform Guidance. Cause - Due in part to transition of management, as described in other findings, the District does not have formalized, documented procedures for tracking and recording activity related to grants. In addition, the District did not completely perform all of the procedures that should be performed in order to properly identify eligible grant expenditure amounts for purposes of submitting timely reimbursement requests. Questioned Costs - No known questioned costs were identified during the course of the audit. Recommendation - We recommend that the District develop and implement a comprehensive set of procedures to identify and track federal and state grants. These procedures should include maintaining a schedule of all grants, detailing the source of funding, expenditures incurred and revenues earned on a grant-to-date basis and a year-to-date basis. These procedures should also include documented communication between those administering the grants and those responsible for the financial records. In addition, we recommend that the District appoint an individual with the responsibility of providing compliance oversight, specifically related to the proper recording of grant expenditures and the timely submission of reimbursement requests. The individual can either be an existing employee or an external contractor who possesses sufficient skill, knowledge or experience in understanding Uniform Guidance requirements. Management?s Response - The District will develop and implement documented procedures for recording and communicating information regarding grants. Oversight and the necessary training will be made available on an as-needed basis, in an effort to eliminate audit adjustments and ensure compliance with grant requirements. In addition, the District will develop procedures to ensure that grant draw requests are prepared, reviewed and submitted on a timely basis in accordance with the grant agreements.