SAFFORD UNIFIED SCHOOL DISTRICT NO. 1Local Government

2024-006: PROVISIONS OF THE DAVIS-BACON ACT Program: Education Stabilization Fund Federal Assistance Listing Number: 84.425U Federal Agency: U.S. Department of Education Pass-Through Agency: Arizona Department of Education Grantor Number: 21FESIII-111217-01A Questioned Costs: $-0- Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Compliance Requirement: N. Special Tests and Provisions Condition/Context: During our testing of two of 2 contractors, we noted the District did not have adequate internal controls designed to ensure contractors were in compliance with applicable Davis-Bacon Wage Rate requirements. The District did not retain documentation supporting indication of certified payrolls being submitted in accordance with monitoring compliance with the Davis-Bacon Act requirements for contracts funded by the Education Stabilization Fund. Criteria or Specific Requirement: The Davis-Bacon Act requires that laborers and mechanics employes by contractors and subcontractors in the performance of federally funded or assisted contracts in excess of $2,000 for construction, alteration, or repair (including painting and decorating) of public buildings or public works must be paid wages not less than those established by the Secretary of Labor. Adequate monitoring of compliance with these wage requirements is required to ensure that workers are being paid correctly per 29 CFR 5.5 compliance provisions. Per 2 CFR section 200.303(a), a non-Federal entity must establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Cause: The District’s procedures and internal controls over monitoring Davis-Bacon Act compliance were not sufficiently designed or implemented to ensure that wage determinations were verified and that contractors were monitored for compliance. Effect: Noncompliance and internal control weakness. Repeat Finding: No. Recommendation: We recommend the District implement policies and procedures to ensure effective monitoring of compliance with Davis-Bacon wage requirements. Views of Responsible Officials: The District concurs with this recommendation and will review its procedures over capital asset and property control.

2022 ? 010 Federal Agency: U.S. Department of Education Federal Program Name: Elementary and Secondary School Emergency Relief Fund Assistance Listing Number: 84.425C, 84.425D, 84.425U Federal Award Identification Number and Year: Not applicable Pass-Through Agency: Arizona Department of Education Pass-Through Number(s): ADE-070121-04, S425D200003, S425D210003 Award Period: July 1, 2021 through June 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of equipment and real property management. The District should have internal controls designed to ensure compliance with those provisions. Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure physical inventory procedures were being performed and assets were properly identified within the property records. Questioned costs: None Context: During our testing, it was noted that the District was not performing physical inventory procedures and reconciling to property records. Also, all three assets tested were not issued an identification number for inventory tracking. Cause: The District was not following its own policies and procedures requiring physical inventories are performed and property records are maintained and updated. Effect: The auditor noted instances of noncompliance with the provisions of equipment and real property management. Repeat Finding: No Recommendation: We recommend the District ensure that its own internal controls are followed to ensure physical inventory procedures are performed and property records are tracked and updated. Views of responsible officials: There is no disagreement with the audit finding.

Condition: The District did not have supporting documents for their Enrollment/Low-Income students reported in their Eligibility listing. Criteria or Specific Requirement: Internal controls over eligibility ? Internal controls should be designed to support the number of low-income students per school as a percentage of enrollment to determine the allocation of funding. Context: The District did not have the correct amounts reported based on the free/reduced lunch student counts historically used to report low-income percentages. The District could not locate the source of the amounts reported. When the percentages were recalculated using the free/reduced lunch reports, the schools were still funded in the correct order with no effect on the overall District funding. Questioned Cost: None. Cause: Inadequate record keeping and retention of records. Effect: Future misreporting of amounts could result in an error in the funding allocated per school. Recommendation: In order to strengthen internal controls over compliance, the District should retain all documents supporting the rank ordering of schools and subsequent allocation of funds. Views of Responsible Officials: Management concurs with this finding and recommendation. Responsible Official: Tim McHugh, Director of Support Operations

Condition: Meal claims did not agree with the District?s monthly summary of meals served report. Criteria or Specific Requirement: Internal controls over cash management ? Internal controls should be designed to accurately report free, reduced, and paid meal claims submitted for federal funding. Context: For two of five monthly meal claims summaries tested, the meals claimed did not agree with the District?s monthly meals served report, resulting in an actual error of $0.68 in under claimed meals. The sample represented 50 percent of the population and was a representative sample of the entire population. Questioned Cost: None. Cause: Inadequate review of the meal claims. Effect: Inadequate review of the meal claims prior to submission, could result in an over or under statement of meals claims going undetected and uncorrected. Recommendation: In order to strengthen internal controls over meal claims, the District should review its current review and approval process to determine meal claims are reconciled to the District?s records and any variances should be investigated, resolved, and documented to support the number of meals claimed. Views of Responsible Officials: Management concurs with this finding and recommendation. Responsible Official: Tim McHugh, Director of Support Operations

U.S. Department of Agriculture Child Nutrition Cluster CFDA Number 10.553, 10.555 and 10.559 Pass-Through Entity: Arizona Department of Education Pass-Through Number: S0491801 Award Period: July 1, 2018 through June 30, 2019 Repeat Finding: No Type of Finding: Significant deficiency in internal controls over compliance and immaterial matter of noncompliance 2019-010 Criteria or Specific Requirement: Internal controls over cash management ? Internal controls should be designed to accurately report free, reduced and paid meal claims submitted for federal funding. Condition: Meal claims did not agree with the District?s monthly summary of meals served report. Questioned Cost: None. Context: For five of five monthly meal claims summaries tested, the meals claimed did not agree with the District?s monthly meals served report, resulting in an actual $6.47 in under claimed meals. The sample represented 50 percent of the population and was a representative sample of the entire population. Cause: Inadequate review of the meal claims. Effect: Inadequate review of the meal claims prior to submission, could result in an over or under statement of meals claims going undetected and uncorrected. Recommendation: In order to strengthen internal controls over meal claims, the District should review its current review and approval process to determine meal claims are reconciled to the District?s records and any variances should be investigated, resolved and documented to support the number of meals claimed. Views of Responsible Officials: Management concurs with this finding and recommendation. Responsible Official: Tim McHugh, Director of Support Operations

U.S. Department of Agriculture Child Nutrition Cluster CFDA Number 10.553, 10.555 and 10.559 Pass-Through Entity: Arizona Department of Education Pass-Through Number: S0491801 Award Period: July 1, 2018 through June 30, 2019 Repeat Finding: No Type of Finding: Significant deficiency in internal controls over compliance and immaterial matter of noncompliance 2019-011 Criteria or Specific Requirement: Eligibility ? Students reported as free, reduced or paid should be based on income guidelines provided by the USDA. Condition: Based on the family income level, students were not always properly classified as free, reduced or paid. Questioned Cost: None. Context: For six of forty income applications tested, the District classification of free, reduced or paid meals did not agree with the classification calculated based on the family income. The sample was representative of the complete population and was a statistically valid sample. Cause: Inadequate review of income versus income guidelines resulting in improper classification based on income levels. Effect: Although the actual and projected error is clearly trivial, the lack of adequate internal controls over eligibility could result in errors in meals claimed for federal support. Recommendation: In order to strengthen internal controls over eligibility requirements and comply with the Uniform Grant Guidance, income eligibility should be reviewed for accuracy and proper classification of free, reduced or paid. Views of Responsible Officials: Management concurs with this finding and recommendation. Responsible Official: Tim McHugh, Director of Support Operations