Northeast Woodland Chartered Public School

Finding type: Material weakness in internal controls over financial reporting. Criteria: The school is required to prepare financial statements in accordance with generally accepted accounting principles (GAAP). This is the responsibility of the School’s management. The preparation of the financial statements in accordance with GAAP requires internal controls over both maintaining internal books and records and reporting the external financial statements and the related footnotes. Conditions and context: The current staffing of the School does not allow the School to have an internal control system in place designed to provide for the preparation of the financials and related footnotes being audited. The School requested that the external auditors draft the financial statements and accompanying notes as a result. Cause of condition: Due to the cost and other considerations, the School has requested that their auditors draft the financial statement and related footnotes. Effect of condition: As a result of this condition, the School lacks internal controls over the preparation of the financial statements in accordance with GAAP, and instead relied in part, on its external auditors for assistance with this task. Recommendation: It is recommended that the School ensures that members of management responsible for the accounting and reporting function receive appropriate training to ensure they are able to apply generally accepted accounting principles in review and in taking responsibility over the financial statement and footnotes prepared by the external auditors. View of responsible officials and planned corrective action: The School has evaluated the cost vs. benefit of establishing internal controls over the preparation of financial statements in accordance with GAAP and determined that it is in the best interest of the School to outsource this task to its external auditors, and to carefully review the draft financial statements and notes prior to approving them and accepting responsibility for their content and preparation. Planned implementation date of corrective action: On-going. The School will continue to evaluate the cost vs. benefit of having someone in management capable of preparation and/or of the financial statements in accordance with GAAP. Person responsible for corrective action: Sarah Arnold, Head of School

Federal Agency: U.S. Department of Education Award Name: Charter Schools Program Year: 2023 Assistance Listing Number: 84.282 Compliance: Activities Allowed and Unallowed and ProcurementFinding Type: Significant deficiency in internal controls and on internal controls over compliance. Criteria: Management is responsible for maintaining adequate records for vendor transactions charged to federal awards that accurately reflect expenses. These records must include an invoice with a signature from a knowledgeable and authorized individual approving the expense. Condition: During control and compliance testing, it was noted that approvals for vendor expenses charged to the federal award were not retained. Context: Of the 60 occurrences tested, 55 were missing any type of approval support. Cause of condition: The School received a large, one-time, federal grant in the current year. Prior to this the School rarely received any large dollar federal grants. The internal control of the School functions such that staff fill out an online request form which was sent to the head of school for review. She then sent the request to the (former) business manager to make the purchase. The sent approval was not retained. Effect of condition: As a result of this condition, the School’s vendor expenditures charged to the federal grant lacked adequate control and compliance documentation. Recommendation: It is recommended that the School maintain adequate records for expenditures charged to federal awards, such as an invoice with clear approval and documentation that the expense should be appropriately charged to the grant. View of Responsible Officials and Planned Corrective Action: In May of 2023, the school implemented a dual approval for expenses. Expense requests are submitted in writing and signed by the Head of School. These requests are saved. There is an additional approval that happens in the payment system, BILL. Planned Implementation Date of Corrective Action: May of 2023. Person Responsible for Corrective Action: Sarah Arnold, Head of School

Federal Agency: U.S. Department of Education Award Name: Charter Schools Program Year: 2023 Assistance Listing Number: 84.282 Compliance: Activities Allowed and Unallowed Finding Type: Significant deficiency in internal controls Criteria: Management is responsible for maintaining adequate records for payroll transactions charged to federal awards that accurately reflect payroll expenses. These records must include employee benefit election forms signed by the respective employees. Condition: During control and compliance testing, it was noted that retirement benefit forms for payroll expenses charged to the federal award were not retained. Context: Of the 9 occurrences tested, 6 were missing benefit forms.Cause of condition: The School had employed an individual to oversee the business functions previously that did not retain this documentation. Effect of condition: As a result of this condition, the School’s payroll expenditures charged to the federal grant lacked adequate control documentation. Recommendation: It is recommended that the School maintain adequate records for payroll expenditures charged to federal awards, such as an retirement benefit forms. View of Responsible Officials and Planned Corrective Action: The school will retain a paper form filled out by employees annually, which details their payroll benefit settings for the year. The form will be signed by the Head of School and the employee. If staff members adjust any deductions during the year, the form will be adjusted and initialed by the employee and the Head of School. Planned Implementation Date of Corrective Action: February 22, 2025. Person Responsible for Corrective Action: Sarah Arnold, Head of School