Oakville School District No. 400

Oakville School District No. 400 September 1, 2020 through August 31, 2021 2021-002 The District did not have adequate internal controls for ensuring compliance with reporting requirements. CFDA Number and Title: 84.041 Impact Aid Federal Grantor Name: Office of Elementary and Secondary Education, Department of Education Federal Award/Contract Number: S041B205451 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0.00 Description of Condition The objective of the Impact Aid Program is to provide financial assistance to local educational agencies whose local revenues or enrollments are adversely affected by federal activities. These activities include the federal acquisition of real property or the presence of children residing on tax-exempt federal property or residing with a parent employed on tax-exempt federal property (?federally connected? children). Payments are made based on the number of federally connected children reported on an annual Application for Impact Aid. During the 2020-2021 school year, the District received $968,127 in Impact Aid funds. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The District must count the number of federally connected children by performing parent-pupil surveys or source check surveys. The District is required to maintain adequate written records to support the number of federally connected children it reports on the Application for Impact Aid. The District did not have adequate internal controls for ensuring it retained survey and consultation results to support the number of federally connected children the District reported on the application. We consider this deficiency 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 The District recently had turnover in the business manager position. The previous business manager was responsible for conducting surveys and preparing the Application for Impact Aid, and the District was unable to locate any of the surveys conducted by the previous business manager. Effect of Condition The District reported 271 federally connected children on its Application for Impact Aid. Our audit could not confirm that number. The District?s noncompliance with grant requirements could jeopardize future federal funding and might require it to return federal funds to the grantor. Recommendation We recommend the District strengthen internal controls to ensure it retains adequate documentation supporting the number of federally connected children it reports on its Application for Impact Aid. District?s Response The district has made changes to how the Impact Aid documents are verified by the use of source documents that are provided to the Chehalis Tribal members for review and signatures. These documents were completed and uploaded to the Impact Aid portal prior to completion of the 2022-2023 school year application that was conducted and submitted in the 2021-2022 school year by the current business manager. The uploading of documents to the Impact Aid portal will provide a secondary back up for locating documents. The district has requested the return of supporting documentation that was removed from the district by the previous business manager. The removal of these documents has resulted in the district not having the necessary documents to support the request of the auditor. To date the district has not received any of the items requested to be returned. 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 222, Impact Aid Programs, Subpart A ? General, Section 9 ? What records must a local educational agency maintain? Title 2 CFR Part 222, Impact Aid Programs, Subpart A ? General, Section 10 ? How long must a local educational agency retain records? Title 2 CFR Part 222, Impact Aid Programs, Subpart C ? Payments for Federally Connected Children Under Section 8003(b) of the Act

Finding ref number: 2021-002 Finding caption: The District did not have adequate internal controls for ensuring compliance with reporting requirements. Name, address, and telephone of District contact person: Melody Bedford, Business Manager P.O. Box H Oakville, WA 98568 360-273-0171 Corrective action the auditee plans to take in response to the finding: The district has made changes to how the Impact Aid documents are verified by the use of source documents that are provided to the Chehalis Tribal members for review and signatures. These documents were completed and uploaded to the Impact Aid portal prior to completion of the 2022-2023 school year application that was conducted and submitted in the 2021-2022 school year by the current business manager. The uploading of documents to the Impact Aid portal will provide a secondary back up for locating documents. The district has requested the return of supporting documentation that was removed from the district by the previous business manager. The removal of these documents has resulted in the district not having the necessary documents to support the request of the auditor. To date the district has not received any of the items requested to be returned. Anticipated date to complete the corrective action: January 31, 2022