Ocosta School District No. 172State Government

The District did not have adequate internal controls and did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program 10.582 – Fresh Fruit and Vegetable Program Federal Grantor Name: U.S. Department of Agriculture (USDA) Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 257WAWA3N1199 257WAWA1L1603 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the Child Nutrition Cluster, which includes the School Breakfast Program, National School Lunch Program and the Fresh Fruit and Vegetable Program. These programs provide free and reduced-price meals to students from low-income families. The District received $482,880 to administer these programs during the 2024-25 school year. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established 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 and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. 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, and must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Although the District has a process to verify the suspension and debarment status for contractors it pays more than $25,000, our audit found the District did not follow this process and did not verify two of the three contractors we tested were not suspended or debarred before purchasing from them. The District selected these contractors from a purchasing cooperative and did not establish a process to retain documentation of the cooperative’s verification of the contractors’ suspension and debarment status. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition District staff were aware of the federal suspension and debarment verification requirements and said they reviewed the cooperative’s suspension and debarment certifications for the contractors. However, staff did not realize they needed to retain this supporting documentation showing the contractors were not suspended or debarred before purchasing from them. Effect of Condition The District did not obtain a written certification from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify contractors it paid $380,890 with federal funds were not suspended or debarred before contracting. Further, the District did not retain documentation showing the purchasing cooperative verified the contractors’ suspension and debarment status before purchasing. Without adequate internal controls, the District increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the District made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the District strengthen its internal controls to verify 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 and maintain documentation demonstrating compliance with this requirement. District’s Response The District acknowledges the finding and appreciates the opportunity to strengthen our documentation practices related to suspension and debarment verification. We would like to clarify that the District did perform suspension and debarment checks through SAM.gov for the vendors in question on an annual basis. While these procedures were consistently completed, the District did not retain independent documentation of those checks. The District relied on SAM.gov as the authoritative federal system of record, including its historical tracking and notification features, rather than maintaining locally stored or printed copies. At the time, staff were not aware that compliance requirements required retention of documentation evidencing these checks. As a result, this finding reflects a documentation deficiency rather than the absence of the control itself. As confirmed during the audit, all vendors tested were in good standing and not suspended or debarred. Therefore, the District was not at risk of contracting with an ineligible vendor, and no questioned costs were identified. Auditor’s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. 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.

The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: US. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-01202 COVID-19, 84.425D-0120484 COVID-19, 84.425U-0138245 COVID-19, 84.425-0137006 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2022, the District spent $440,436 in federal funding of its ESF awards. This included $154,038 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), and $286,398 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U). Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal money must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. Description of Condition During the 2020-21 school year, the District paid $67,082.40 from its ESSER II award to hire a contractor to build pavilions that allow for covered, open air spaces for eating and learning to help prevent the spread of COVID-19. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: ? Include a provision in the contract that the contractor comply with federal wage rate requirements ? Collect weekly certified payroll reports from the contractor to confirm it paid laborers proper prevailing wages We considered these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition While District officials knew about state prevailing wage requirements, they did not know about the federal requirements since this was the District?s first federally funded construction project. Specifically, officials did not know the District needed to obtain all certified payroll reports each week, and that the contract between the District and the contractor needed to include specific language to meet prevailing wage rate requirements. Effect of Condition Without adequate internal controls that ensure it includes the prevailing wage rate clauses in its contracts and collects all weekly certified payroll reports, the District cannot demonstrate it complied with the federal wage rate requirements. The District could also be liable for paying any additional wages if the contractor did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts, as well as implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. Additionally, we recommend the District consider the benefit of additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District?s Response Ocosta School District did not complete the required documentation to ensure prevailing wage was paid. We did not collect weekly certified payroll reports. Moving forward, before any project begins staff will be reminded of all federal requirements. Ocosta School District will train staff on federal program requirements. Staff will be instructed what the expectations are for the contractors. They will be directed to have the appropriate time sheets available to give to the contractor, explain that weekly payroll reports will be completed and certified. 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 corrective action taken during our next regular 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 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls). Title 29 CFR, Section 3.3 ? Weekly statement with respect to payment of wages, and Section 3.4 ? Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports.

2021-001 The District?s internal controls were ineffective for ensuring compliance with time-and-effort documentation requirements. CFDA Number and Title: 84.287 ? Twenty-First Century Community Learning Centers 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: 0991622 & 0991524 Questioned Cost Amount: $0 Background The objective of the Twenty-First Century Community Learning Centers program is to establish or expand community learning centers that provide students with academic enrichment opportunities during non-school hours or periods when school is not in session to complement the students? regular academic program. During the 2020-21 school year, the District spent $404,506 in Twenty-First Century Community Learning Centers program funds. 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 controls. The District is responsible for ensuring all payroll costs charged to the program are supported by time-and-effort documentation, as federal regulations and the awarding agency require. The Office of Superintendent of Public Instruction (OSPI) requires employees to prepare a semiannual certification if they are working on a single cost objective, program or activity. The semiannual certification must be completed timely, but not until the end of the period worked, and signed and dated by the employee or a supervisor with first-hand knowledge of the work performed. Description of Condition The District?s controls were ineffective for ensuring it maintained adequate time-and-effort documentation. The District charged payroll to this program for three employees who were working on a single cost objective. The District did complete semiannual certifications for these three employees, but they were completed and signed an average of 133 days before the employees had actually completed most of the work. As a result, all work that employees performed after the signature dates on the semiannual certifications is considered an unsupported charge to the program. We consider this deficiency in internal controls to be a material weakness. The issue was reported as a finding in the prior audit as finding 2020-001. Cause of Condition The District has been working to strengthen its controls over time-and-effort documentation requirements over the past three years. Although the District has improved its documentation and controls from prior years, staff responsible for monitoring time-and-effort reporting did not have a clear understanding of the requirements and were not aware that semiannual certifications need to be signed after the employees perform the work. Effect of Condition Without proper records, the District did not meet time-and-effort documentation requirements to support costs charged to the program, and it cannot demonstrate to its federal grantor that payroll costs of $75,131 were accurate or valid. Based on our testing, approximately 19 percent of payroll amounts charged to the grant lacked sufficient time-and-effort records. However, after bringing this issue to management?s attention, the District provided alternative documentation that adequately showed the costs charged to the program were allowable; therefore, we will not question any of the costs. Recommendation We recommend the District strengthen its internal controls and train staff to ensure it has time-and-effort documentation to support all payroll costs charged to the program in compliance with the federal grantor and OPSI requirements. District?s Response Auditor?s Remarks 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, Attachment A. Semi-Annual Certification ? Single Cost Objective.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Ocosta School District No. 172 September 1, 2019 through August 31, 2020 2020-001 The District did not have adequate internal controls to ensure compliance with time and effort documentation requirements. CFDA Number and Title: 84.287 Twenty-First Century Community Learning Centers Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: 0991514 Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: 0991608 Questioned Cost Amount: $0 Background The objective of the Twenty-First Century Community Learning Centers program is to establish or expand community learning centers that provide students with academic enrichment opportunities during non-school hours or periods when school is not in session to complement the students? regular academic program. During the 2019-20 school year, the District spent $379,669 in Twenty-First Century program funds. 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 established controls. The District is responsible for ensuring all payroll costs charged to the grant are supported by time and effort documentation, as required by federal regulations and the grantor. Depending on the number and type of activities employees work, time and effort documentation can take the form of a semi-annual certification or monthly personnel activity report, such as a timesheet. Description of Condition The District?s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. The District did not have documentation for a portion of the time charged to the grant by four employees. We consider this deficiency in internal controls to be a significant deficiency. The issue was reported as a finding in the prior audit as finding 2019-001. Cause of Condition The District has been working to strengthen its controls over time and effort requirements for the past two years. Although it has improved its documentation and controls from prior years, District staff responsible for monitoring time and effort reporting did not have a clear understanding of time and effort requirements. Additionally, when noncompliance was identified, the District would change its processes going forward but could not retroactively correct noncompliance prior to that point. This has resulted in a cycle of noncompliance for the past several audits. Effect of Condition Without proper time-and-effort records, the District did not comply with documentation requirements to support costs charged to the federal program, and it cannot ensure federal grantors that payroll costs of approximately $28,000 were accurate or valid. Based on our testing, 8% of payroll records lacked sufficient time-and-effort records. However, the District provided alternative documentation that adequately showed the costs charged to the program were allowable. Therefore, we are not questioning these costs. Recommendation We recommend the District establish internal controls to ensure all payroll costs charged to the grant are supported by time and effort documentation to be in compliance with federal and OSPI requirements. District?s Response Our 2018-19 was not completed until the summer of 2020. There was a finding that Time & Effort was not being accurately maintained. Ocosta School District assigned a different staff member to oversee time and effort documents on a monthly basis. This person reports monthly to the building principal to verify accuracy. The building principal signs off on the time and effort and the reports are brought to the district office and reviewed by the Business Manager and/or Director of Teaching and Learning to verify data collection. Time and Effort had been competed for the 2019-20 school year when we became aware we still had an issue. The only way to have correct information for the current audit would have been to recreate documents that had already been signed. Due to Covid we did not call-in employees for their signature. Going forward, we are using forms posted on OSPI?s website to document time and effort. We continue to monitor monthly and have multiple reviews and signatures verifying the information is correct. 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 corrective action taken during the next regular 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 Grant.

2019-001 The District did not have adequate internal controls to ensure compliance with requirements for time-and-effort documentation. CFDA Number and Title: 84.287 Twenty-First Century Community Learning Centers 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: 991171, 9915040 Questioned Cost Amount: $0 Background The objective of the Twenty-First Century Community Learning Centers program is to establish or expand community learning centers that provide students with academic enrichment opportunities during non-school hours or periods when school is not in session to complement the students? regular academic program. During the 2018-19 school year, the District spent $375,850 in Twenty-First Century program funds. 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 established controls. The District is responsible for ensuring all payroll costs charged to the grant are supported by time-and-effort documentation, as required by federal regulations and the grantor. Depending on the number and type of activities employees work, time-and-effort documentation can take the form of a semi-annual certification or monthly personnel activity report, such as a timesheet. Description of Condition The District?s controls were not effective to ensure it maintained accurate time-and-effort documentation, as required by federal regulations and the grantor. The District did not maintain one of the two semi-annual certifications as time-and-effort documentation for an employee who worked full time in the Twenty-First Century program. In addition, the District did not adequately maintain monthly time-and-effort documentation for one employee who was missing time-and-effort documentation for September through December 2018. We consider this deficiency in internal controls to be a material weakness. The issue was reported as a finding in the prior audit as finding 2018-001. Cause of Condition District staff responsible for monitoring time-and-effort reporting for this program lacked the necessary training and did not have a clear understanding of the time-and-effort requirements. Effect of Condition Without proper time-and-effort records, the District did not comply with documentation requirements to support costs charged to the federal program, and it cannot ensure federal grantors that $34,956 of payroll costs charged to the program were accurate or valid. However, the District provided alternative documentation that adequately showed the costs charged to the program were allowable. Therefore, we are not questioning these costs. Recommendation We recommend the District strengthen internal controls and dedicate resources to ensure staff responsible for compliance with federal requirements have the necessary training to understand when time-and-effort records are required. District?s Response When it was discovered that the lack of internal controls with time-and-effort documentation was an issue, the problem was discussed among administrators. A resolution was made to have another staff member oversee time-and-effort document completion on a monthly basis. This person will report monthly to the building Principals to verify document accuracy and then confer with the Director of Teaching & Learning and the Business Manager to once again verify that the data collected meets the requirements. The Director of Teaching & Learning and Business Manager will be the final staff members to monitor the completion of the documents and to ensure that the information on the time-and-effort sheets meets compliance requirements. 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 corrective action taken during the next regular 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, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. 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 Grant.

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