KAYENTA UNIFIED SCHOOL DISTRICT NO. 27Local Government

Finding Number: 2025‐001 Repeat Finding: Yes, 2024‐001 Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Impact Aid 84.041 N/A N/A Education Stabilization Fund 84.425 S425U210038 N/A Federal Agency: U.S Department of Education Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance Compliance Requirements: Reporting Criteria In accordance with 2 CFR 200.512, the single audit must be completed, and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. Condition The District does not have adequate controls in place over federal reporting compliance. Cause The District does not have adequate controls over financial reporting and records retention. Effect The District was not in compliance with federal regulations and guidelines. Context The sample was not intended to be, and was not, a statistically valid sample. The District’s Single Audit Report was not completed and submitted within nine months of fiscal year‐end. Recommendation The District should implement better controls over financial reporting and records retention to ensure all documents are prepared and available for the completion of the financial reports. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2025‐002 Repeat Finding: Yes, 2024‐002 Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425U Federal Agency: U.S Department of Education Federal Award Number: S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: n/a Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Equipment and Real Property Management Criteria District management is responsible for establishing and maintaining internal control over the District’s accounting records and financial reporting in order to meet financial reporting objectives of the District. CFR 200.313 requires a physical inventory, of property purchased with federal funds, must be completed and reconciled with the property records every two years. The Uniform System of Financial Records (USFR) prescribes required procedures in the areas of capital assets including an inventory at least every three years. Condition The District lacked adequate controls over capital assets purchased with federal funds. Cause District and federal policies and internal controls in place were not always operating effectively or were not always followed. Effect The District was not in compliance with CFR 200.313. Context During our review of the District’s capital assets, we noted that the District has not performed a physical inventory and reconciliation over stewardship and capital assets since fiscal year 2017. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should appoint an individual to ensure that a physical inventory of property purchased with federal funds is conducted and reconciled back to the property records every two years. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2024‐001 Repeat Finding: No Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants 84.010 S010A230003 N/A Child Nutrition Cluster 10.553, 10.555, 10.559 7AZ300AZ3 N/A Impact Aid 84.041 N/A N/A Education Stabilization Fund 84.425 S425D210038, S425U210038 N/A Federal Agency: U.S Department of Education, U.S. Department of Agriculture Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance Compliance Requirements: Reporting Criteria In accordance with 2 CFR 200.512, the single audit must be completed, and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. Condition The District does not have adequate controls in place over federal reporting compliance. Cause The District does not have adequate controls over financial reporting and specifically, capital assets. Effect The District was not in compliance with federal regulations and guidelines. Context The sample was not intended to be, and was not, a statistically valid sample. The District’s Single Audit Report was not completed and submitted within nine months of fiscal year‐end. Recommendation The District should implement better controls over financial reporting and records retention to ensure all documents are prepared and available for the timely completion of the financial reports. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2024‐002 Repeat Finding: No Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425 Federal Agency: U.S Department of Education Federal Award Numbers: S425D210038, S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Equipment and Real Property Management Criteria District management is responsible for establishing and maintaining internal control over the District’s accounting records and financial reporting in order to meet financial reporting objectives of the District. CFR 200.313 requires a physical inventory, of property purchased with federal funds, must be completed and reconciled with the property records every two years. The Uniform System of Financial Records (USFR) prescribes required procedures in the areas of capital assets including an inventory at least every three years. Condition The District lacked adequate financial controls over capital assets. Cause District and Federal policies and internal controls in place were not always operating effectively or were not always followed. Effect The District was not in compliance with CFR 200.313. Context During our review of the District’s capital assets, we noted that the District has not performed a physical inventory and reconciliation over stewardship and capital assets since fiscal year 2016‐17. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should appoint an individual to ensure that a physical inventory of property purchased with federal funds is conducted and reconciled back to the property records every two years. Views of Responsible Officials See Corrective Action Plan.

Findings and Questioned Costs Related to Federal Awards Finding Number: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425 Federal Agency: U.S. Department of Education Federal Award Numbers: S425D200038, S425D210038, S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Reporting Criteria ESSER, GEER, and EANS grantees must submit an annual performance report with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. LEAs/subrecipients submit data to the SEA/Governor for the SEA/Governor’s report. Annual reports are due each spring for the previous reporting period. Condition District procedures were not in place to ensure all federal requirements were followed. Cause The District’s internal controls and procedures were not always followed to ensure that all applicable reports were submitted to the SEA. Lack of management oversight contributed to the deficiency. Effect The District was not in compliance with federal requirements related to special reporting. Context The District did not submit the LEA Uses of ESSER I, II, & III – Use of Funds Detail report to the Arizona Department of Education as required. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should ensure that all special reports are submitted to the Arizona Department of Education in a timely manner, and that adequate supporting documentation is maintained. Views of Responsible Officials See Corrective Action Plan.

2022-002 Late Audit Submission Programs: 84.041 Impact Aid, 84.425 Covid-19 Education Stabilization Fund 84.027 Special Education - Grants to States Federal Agency: U.S. Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, material weakness Compliance Requirement: L. Reporting CONDITION The District did not submit their audit for the fiscal year ending June 30, 2022, timely. The audit was submitted April 24, 2023, which was 24 days past the March 31, 2023 deadline. CRITERIA 2 CFR ? 200.512(a) provides, in part: "The audit must be completed and the data collection form ... must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period." 2 CFR ? 200.520 provides, in part: "That to qualify as a low-risk auditee and be eligible for reduced audit coverage the following condition must be met: Single audits were performed on an annual basis in accordance with the provisions of this Subpart, including submitting the data collection form and the reporting package to the FAC within the timeframe specified in ? 200.512." CAUSE The District did not have proper procedures in place to ensure that the audit was completed and submitted within the designated timeframe. EFFECT Not making all audit documentation available in a timely manner resulted in the audit and data collection form submissions to be late and, therefore, not available to the public within the required timeframe. This late submission also excludes the District from qualifying as a low-risk auditee. RECOMMENDATION The District should implement procedures to ensure that all audit documentation is available for audit in a timely manner and the audit report is completed and submitted within the appropriate timeframe.

CONDITION The District exceeded the allowable cash balance for its nonprofit school food service program. The District had an available cash balance of $359,952 as of June 30, 2019, and total expenditures of $992,983 for fiscal year 2018-19. Per federal regulations, the District is limited to a cash balance not to exceed three months of average expenditures or $297,895, resulting in an excess cash balance of $62,057. CRITERIA Federal Regulation 7 CFR 210.14(b) provides: "Net cash resources. The school food authority shall limit its net cash resources to an amount that does not exceed three months average expenditures for its nonprofit school food service or such other amount as may be approved by the State agency in accordance with ?210.19(a)." CAUSE The District has accumulated excess balance due to the carry forward of revenues in excess of expenditures from prior years. EFFECT The District has an excess cash balance of $62,057 for its nonprofit school food service program as of June 30, 2019. RECOMMENDATION We recommend that the District establish proper monitoring procedures to ensure that the cash balance for the food service program does not exceed three months of average expenditures.

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