Orangeburg County School District

2021-004. Cash Management Requirements Related to U.S. Department of Agriculture, Child Nutrition Cluster (Assistance Listing #10.553 and #10.555)Criteria: The Child Nutrition Cluster provides the District with funding to operate its school breakfast, lunch, and snack programs. Each month, the District prepares reports showing the number of meals and snacks served at all locations and based on the predetermined reimbursement rate, is paid by the South Carolina Department of Education for those meals based on the number served. The District is required to maintain records that support the number of meals served and claimed for reimbursement.Condition: The District did not maintain proper documentation to support the number of meals claimed and reimbursed by the State Department of Education.Context / Cause: Throughout the 2020-2021 school year, the District was operating under a dramatically different feeding program as a result of the pandemic caused by the COVID-19 coronavirus. Due to the unique circumstances that persisted throughout the year, the District was unable to adapt and change its recordkeeping process related to meals served and thus when it came time for audit, the District was unable to locate the records supporting meal counts at various District locations throughout the year.Effect: The District was unable to support the meal counts used in requesting reimbursement during the fiscal year ended June 30, 2021.Questioned Costs: From the testing that we performed, we identified $187,792 of questioned costs where the District claimed reimbursement for more meals than the District had records to support. Extrapolating this error to the population using the error rates in our sample, we project approximately $629,400 of likely questioned costs where the District claimed reimbursement for more meals than the District has records to support.Recommendation: We recommend the District review its procedures for calculating accurate meal counts to request reimbursement from the State Department of Education under its school nutrition program. Furthermore, we recommend the District review its procedures for determining that proper records have been maintained to support the meal counts and that these records are appropriately stored and available for review and/or audit.Auditee?s Response: We concur with the finding. Procedures have been put in place to have each cafeteria manager and cashier prepare ?special? daily audit reports with proper back up for the auditors. The daily audit sheets will contain a copy of the production records, roster, or printout of the Consolidated Sales Report from the Point of Sale. These audit sheets will be stored separately from their day-to-day operation sheets for each access for review/audit.

2021-005. Procurement Requirements Related to U.S. Department of Agriculture, Child Nutrition Cluster (Assistance Listing #10.553 and 10.555) and U.S. Department of Education, Special Education Cluster (Assistance Listing #84.027 and #84.173)Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), states that non-Federal entities are prohibited from contracting with or making sub-awards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred.Condition: During our testing of procurement, suspension, and debarment related to the above two (2) major federal programs, we noted the District did not retain documentation to support its check of the excluded parties list system to ensure the District was not entering into covered transactions with parties who had been suspended or debarred.Effect: Not performing a verification check for covered transactions, by using the System for Award Management website (SAM.gov) and retaining the results of that search has caused the District to not be in compliance with requirements of its federal award programs..Cause: The District was not aware of the requirement to maintain this written documentation and therefore was unable to show that the vendors had been tested prior to awarding the contract; however, during our testing of the transactions, we noted no parties with whom the District contracted under the above two (2) programs that were included on the excluded parties listing and thus there are no questioned costs to report.Recommendation: Finance and management should be familiar with all aspects of the Procurement Policy and ensure that it has been followed for all non-exempt purchases made by the District.Auditee?s Response: We concur with the finding. We will continue to use SAM.gov and maintain appropriate documentation for Federal and Bid Solicitations. The debarment and suspension statement were added to our signature page on bids and contracts. SAM.gov certification statement has been added on purchase orders.

Finding 2020-002 Material Audit Adjustments Criteria: The District should present a trial balance to the auditor that does not require any audit adjustments that would have a material effect on the financial statements. Condition: Several significant audit adjustments which affected the General Fund, Special Revenue Fund, Food Service Fund, Debt Service Fund, and Capital Projects Fund (Governmental Funds) were proposed and posted to the District?s general ledgers to correct material misstatements. It is believed that there is more than a remote likelihood that these errors would not have been detected and corrected by the District?s internal control prior to issuance of the District?s financial statements. Cause: Errors in the District?s recording of fringe and indirect cost allocations, voided checks and beginning cash balances, duplicate revenues, receipt of prior year receivables, beginning fund balances, tax revenues and activity from the County Treasurer, omission of some prior year expenditures paid by former districts, and payroll withholdings. Effect: Without the proposed audit adjustments, the District?s financial statements would have been materially misstated as of and for the year ended June 30, 2020. Auditor?s Recommendation: General ledger balances should be reviewed and compared to supporting reconciliations, payables and withholdings and receivables should be traced to payment of receipt.

Finding 2020-003 Maintaining the General Ledger Criteria: The District should capture and properly record all of its financial activity in the general ledger system by fund and reconcile monthly to bank and other reconciliations in order to generate financial data for reporting and facilitate Board decisions. Condition: The District did not import the correct beginning balances from the former three districts into their system. Many receipts of prior year receivables were recorded in current year revenues. Payroll withholdings carried from the prior year were not reconciled to payment. Some bank accounts were not reconciled until after year end. In September, 2020 the District issued a request for proposals for consulting services to assist correcting and recording these issues and a firm was subsequently hired. A closed out trial balance was presented for audit on January 7, 2021 that still contained an unidentified balance of $1,663,617.28 resulting from adjusting beginning balances and payment/receipt of payables/receivables. We also noted several expenditure accounts carried a credit balance due to a reversing entry being made to an improper account; some expenditure accounts had the function as 000 and several account numbers used were not in the SC Department of Education?s listings causing issues with proper reporting; several Pupil Activity Funds did not have a fund name which required determining their true classifications. Cause: The District?s finance office endured much turnover during the fiscal year. The task of reviewing the general ledger for accuracy and performance of monthly reconciliations was not performed timely. Effect: The general ledger did not capture and properly record the financial data of the District. Auditor?s Recommendation: The general ledger reports for each fund should be reviewed monthly and agreed to bank and other reconciliations and any discrepancies corrected.