East Valley School District No. 361Local Government

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS East Valley School District No. 361 September 1, 2023 through August 31, 2024 2024-001 The District did not have adequate internal controls and did not comply with time-and-effort requirements. Assistance Listing Number and Title: 84.010, Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: GT-01077 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting academic standards and reside in areas with high concentrations of children from low-income families. During the fiscal year 2024, the District spent $1,423,886 in federal funds from Title I. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of internal controls. The District is responsible for ensuring it supports all payroll costs charged to the program with adequate time-and-effort documentation, as required by federal regulations and the awarding agency. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report, such as a detailed timesheet. Time-and-effort documentation must also be signed and dated after the work is completed. Description of Condition The District's internal controls were ineffective for ensuring it supported all salaries and benefits it charged to the program with appropriate time-and-effort documentation, as federal regulations and OSPI require. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District changed how it was funding payroll costs for five employees who work in schoolwide programs and overlooked collecting time-and-effort documentation for them when it decided to charge their costs to the Title I program. Effect of Condition The District did not obtain time-and-effort documentation for five employees whose payroll and benefits costs totaling $312,961 were charged to the program. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the awarding agency's documentation requirements to support costs charged to federal programs. Further, the District cannot assure federal grantors that payroll costs it charged to the program were accurate and valid. During the audit, the District obtained and provided the signed time-and-effort records to support the payroll costs it charged to the program; therefore, we are not questioning these costs. Recommendation We recommend the District establish and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining signed time-and-effort documentation timely. District Response The District has already updated time and effort processes to ensure mid-year additions or corrections are included on Time and effort documentation. We have also added a secondary time and effort review process to ensure all employees charged to the Federal program are included on time and effort documentation. Auditor Remarks We appreciate the District's commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the status of the District's corrective action 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, Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. 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, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs. Office of Superintendent of Public Instruction Addendum to Bulletin 048-17 Guidelines for Charging Employee Compensation to Federal Grants establishes requirements for documenting time-and-effort, including fixed schedule systems.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS East Valley School District No. 361 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal suspension and debarment requirements. Assistance Listing Number and Title: 10.553 – School Breakfast Program 10.555 National School Lunch Program 10.559 – Summer Food Service Program for Children 10.582 – Fresh Fruit and Vegetable Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 237WAWA3N1199, 237WAWA3N8903, 237WAWA1L1603 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The District participates in the Child Nutrition Cluster, which includes the School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children and Fresh Fruit and Vegetable Program. These programs provide free or reduced-price meals to students from families with low incomes. In fiscal year 2023, the District received $2,189,061 to administer the programs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established program controls. Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded. The District may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The District must verify this before entering into the contract or before charging costs to a federal award, and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the District’s controls were ineffective for ensuring that it verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. Specifically, the District did not search for exclusion records at SAM.gov, include a clause in the contract or obtain a written certification to verify that one of the three contractors we tested were not suspended or debarred before purchasing from the contractor. In 2023, the District paid the contractor $77,125 of program funds. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Initially, the District did not intend to purchase from this contractor during the fiscal year. As a result, District staff did not include this contractor in their semi-annual suspension and debarment check for exclusion records at SAM.gov. Additionally, once the District decided to purchase from the contractor, staff did not verify the contractor’s status as required. Effect of Condition Without adequate internal controls, the District cannot ensure the contractor it paid with federal funds is eligible to participate in federal programs. Any program funds the District used to pay contractors that have been suspended or debarred would be unallowable, and the awarding agency could potentially recover them. After the fiscal year, the District verified the contractor was not suspended, debarred or excluded from doing business with the federal government. As a result, we are not questioning these costs. Recommendation We recommend the District strengthen internal controls to ensure all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them. District’s Response The District has implemented changes requiring all orders paid all in part with federal funds in an amount greater than $25,000 to be submitted on a purchase order. Before the purchase order is approved, business office staff will complete a suspension and debarment check at SAM.gov. Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the status of the District’s corrective action 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. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. 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 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

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