HAMPTON COUNTY SCHOOL DISTRICTLocal Government

Duplicate Expenditure Claimed and Reimbursed for a Federal Program - Title I grant to LEAs 84.010 CONDITION - A check was written for a reimbursable expenditure under the Title I program in the amount of $111,914.19 and subsequently voided. Then, another check was written to replace the first check. Both amounts were claimed for reimbursement under the program. During the audit process, the expenditure was identified as a duplicate and an adjustment was made to record the overclaimed amount due back to the SC Department of Education. CRITERIA - Complete, accurate, and timely bank reconciliations are a key component of the District’s internal control system. Monthly bank statement reconciliations should be performed on a timely basis. Additionally, procedures should be in place to ensure that reconciliations are reviewed by someone independent of the preparation process. Any reconciling items, including long outstanding items, should be investigated and resolved on a monthly basis. CAUSE - District finance personnel were heavily involved in preparation for and performance of the fiscal year 2023 audit, which was not completed until August of 2024. Intensive work on the audit during this period made it difficult to complete the preparation and review of certain bank reconciliations on a timely and complete basis. EFFECT - In certain cases, the District did not fully employ the important internal control provided by complete, accurate, and timely bank reconciliations. In one instance, the District understated its bank balance and overstated expenditures. RECOMMENDATION - The bank statements should be reconciled each month in a complete, accurate, and timely manner and carefully reviewed for accuracy.

Report Completion and Filing - Program Name: ESSER II and ESSER III; ALN Numbers: 84.425D and 84.425U; CONDITION - For the ESSER II program, the District was not able to provide the quarterly and annual reports and could not provide evidence of their filing. For the ESSER III program, the District did not file the annual report, and the quarterly reports for the 2024 fiscal year were not filed until January 2025. CRITERIA - Compliance requirement – quarterly and annual reports are required to be filed for ESSER programs. The reports are due by the fifth day following each calendar quarter. CAUSE - The individual responsible for oversight of the District’s ESSER programs did not complete, file, and retain copies of the required quarterly and annual reports on a timely basis. This individual is no longer employed by the District. EFFECT - The SC Department of Education may question the ESSER II program spending. The District may face impacts for its non-compliance with report filing requirements. QUESTIONED COSTS - None. RECOMMENDATION - The District should consider filing the ESSER II reports, if they have not been filed. The District should implement procedures to ensure the accurate, complete, and timely filing of all required reports.

Condition and context: In reviewing the invoices submitted for 75% reimbursement under a USDA Facilities Grant, we noted a $16,876.64 invoice submitted was actually previously reimbursed with other state grant funds in the prior year. This invoice had been moved through journal entries in the general ledger from its original posting as an expenditure. When the invoice was submitted for reimbursement to the USDA Rural Development office, the District did not review the general ledger to verify it was still available to be reimbursed. Journal entries had been made to move it to another fund as other grant funds were used for reimbursement. Therefore, these expenditures were not allowed to be reimbursed again. The District contacted the USDA grant office. They have allowed invoices for other applicable expenditures as a replacement so that no funds will be requested to be paid back to USDA.

Condition and context: Through our audit procedures, we noted the District failed to include approximately $757,000 of covered member salaries on the retirement quarterly report for the quarter ending December 31, 2022 which resulted in $235,189 of contributions not being reported or paid. These contributions included both employee contributions which had been withheld from wages and employer contributions which had been recorded as District expenditures in the general ledger. As of the end of June, 2024, the District had not paid this amount and was awaiting the calculation of interest and penalties assessed for late payment.

Condition and context: When initiating the drafts to pay payroll related withholdings and expenses, the District haphazardly selects the vendors and pay periods being paid into one combined draft from the bank account. The District staff does not retain a listing of what is being paid with each draft in order to reconcile to the payroll records. The posting to the general ledger for the payment of payroll related withholdings and expenditures is also handled in a haphazard manner by combining various items over several pay periods and vendors into a "direct voucher posting" entry and cannot easily be reconciled to the actual drafts from the bank account. These “direct voucher posting” entries are also recorded as outstanding items even though the drafts have not been initiated until after the month end of the bank reconciliation date which incorrectly reduces the cash balance and payroll liability balances. The combination of lack of records for initiating the drafts from the bank account and lack of detailed records for posting items as paid in the general ledger resulted in no accounting trail which prevents a correct reconciliation.

Condition and context: The SC Department of Education’s accounting system utilizes specific function and location codes and specific transfer accounts in their approved general account structure. The District’s unadjusted general ledger contained various generic function codes. Adjusting journal entries were necessary to correct the function for some expenditures. Of these necessary adjusting journal entries, $48,000 was a material adjustment to the EIA Special Revenue Fund for correcting functions and $271,889 and $43,545 were material adjustments to the Debt Service Fund and Special Projects-Special Revenue Fund, respectively, for correcting locations. Since federal revenues are not allowed to be reported in capital project funds under the SC Department of Education's accounting system, material adjustments of $276,475 were necessary to move federal grant activity to a special revenue fund.