Othello School District No. 147

The District did not have adequate internal controls to ensure compliance with federal Title I requirements for allocating funds to school buildings. Table Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards who reside in areas with high concentrations of children from low-income families. During the 2018 19 school year, the District spent $1,319,086 in Title I federal funding. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of program controls. Title I requires districts to concentrate higher amounts of funds in schools with higher poverty percentages. To do this, the District is responsible for ranking the schools from highest to lowest concentrations of poverty, and including those rankings in the Title I application. The District is required to allocate grant funds to each attendance area or school in rank order and must maintain documentation to support the rank order of its school buildings. Description of Condition During fiscal year 2019, the District did not have adequate internal controls over the school building funding allocation process. It did not keep support for school building enrollment and low-income counts used to calculate the rank order and allocation of funding for its school buildings. We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District had turnover in the position responsible for preparing the Title I grant application. During the transition, staff did not keep copies of the records it used to support its school building rank orders. The District could not determine the date of the data used in the grant application, and could not reproduce the support for the figures in the Title I application. Effect of Condition Without proper documentation supporting the District?s rank order, the District cannot show that it complied with grant requirements and allocated funding from the highest-to-lowest-poverty school buildings, as required. Further, this may have limited the type and nature of services provided at schools with higher percentages of poverty. Recommendation We recommend the District establish and follow internal controls to ensure that it complies with federal requirements and maintains adequate records to demonstrate it properly allocated grant funds to eligible school buildings based on poverty percentages. District?s Response The District recognizes the lack of internal controls around retention of supporting documents for the rank order allocations. The District has worked with OSPI to determine proper documents to retain and has a process in place to maintain such records. Auditor?s Remarks We appreciate the steps the District is taking to resolve this issue. We will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, establishes requirements for management of Federal awards to non-Federal entities. Title 34 CFR, Part 200, Title 1 ? Improving the Academic Achievement of the Disadvantaged, Subpart A ? Improving Basic Programs Operated by the Local Educational Agencies, Section 78 ? Allocation of funds to school attendance areas and schools

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