Cartwright Elementary School District No. 83Local Government

Finding Number: 2025‐001 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 Number: S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $231,730 Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria Management is responsible for establishing and maintaining internal controls over its accounting records. Additionally, 2 CFR 200.303 requires the District establish and maintain internal control over the federal awards that provides reasonable assurance that the District is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Districts must submit expenditure support through the Arizona Department of Education’s (ADE) Grants Management Enterprise system for ADE to review and approve grant reimbursements. Districts must perform grant close out procedures. Condition The ESSER III Set Aside grant had a positive ending balance at year end. However, the grant should have been closed out as of 12/31/24. Cause The District's internal controls over grant close out and reporting procedures did not detect an error. Effect The District is at risk for making unallowable expenditures. The District was required to revert the unallowable funds to the grantor. Context Duplicate invoices were submitted to ADE for reimbursement, resulting in an overpayment of $231,730. In addition, the District requested and was reimbursed $28,019 in indirect costs, however, that money was not moved into the indirect cost fund until after audit procedures were performed. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should strengthen existing internal controls over grant reporting to enhance procedures that reduce the risk of unallowable expenditures. Specifically, procedures should be in place to prevent expenditures from being submitted more than once for reimbursement. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2022-001 Repeat Finding: No Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Agency: U.S. Department of Education Federal Award Number: S425D210038, S425U210038 Pass-Through Agency: Arizona Department of Education Questioned Costs: Unknown Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Special Tests and Provisions CRITERIA All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC ??3141-3144, 3146, and 3147). CONDITION It could not be determined whether laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds were paid equal to or in excess of the prevailing wage rate for the locality. CAUSE The District was unaware Davis Bacon requirements applied to their construction contract. In addition, the contract was miscoded as equipment purchases instead of construction services. EFFECT The District did not comply with the special tests and provisions requirements of the grant. CONTEXT The District did not include required prevailing wage rate clauses in the contract or subcontract. The District did not require the contactor or subcontractor to submit the required certified payroll for each week work was performed. The District did not obtain prior approval from the Arizona Department of Education (ADE) nor submit the required ADE documentation related to the project. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION The District should review Federal requirements over Davis Bacon, develop policies and procedures, and ensure those developed policies and procedures are implemented. Further, the District should review the chart of accounts and ensure grant budget and expenditure amounts are recorded as prescribed in the chart of accounts. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.

Finding Number: 2019-001 Repeat Finding: No Program Name/CFDA Title: Child Nutrition Cluster CFDA Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Number: 7AZ300AZ3 Pass-Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles CRITERIA According to the Memo SP60-2016, Indirect Costs Guidance for State Agencies and School Food Authorities, issued by the United States Department of Agriculture (USDA), a District may recover indirect costs of services rendered to school food service at a rate not to exceed the unrestricted indirect cost rate approved by the Arizona Department of Education (ADE). The approved indirect cost rate is subject to change each fiscal year. CONDITION The District charged the Child Nutrition Cluster program as reported in the Food Service Fund $1,588,837 in indirect costs for the year, whereas the amount charged should have been $1,528,968. CAUSE The District was unaware that commodity food costs must be excluded when determining the net expenditures the approved unrestricted indirect cost rate is applied against. EFFECT The District overcharged indirect costs of $59,870 to the Child Nutrition Cluster program reported in the Food Service Fund. CONTEXT When calculating indirect costs, the District did not exclude the cost of commodities as result the 25 percent indirect cost rate was applied to a net food service expenditure amount that was greater than it should have been. As a result, the District overcharged $59,870 to the Child Nutrition Cluster program reported in the Food Service Fund. The District did post a correcting entry to reduce the amount of indirect costs charge to the program to the allowable amount. RECOMMENDATION The District should ensure indirect costs are calculated in accordance with the formula set forth in the guidance issued by USDA. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.

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