Winlock School District No. 232Local 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 Fruits and Vegetables Program (FFVP) 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: N/A 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, National School Lunch, and Fresh Fruits and Vegetables programs. These programs provide funding for free and reduced-price meals to students from low-income families. The District received $586,846 to administer these programs during the 2023-2024 school year. 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 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 that 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 Our audit found the District did not have internal controls to verify all contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District experienced turnover among key staff, and current staff could not locate documentation to demonstrate compliance with federal suspension and debarment requirements. 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 the two contractors it paid $42,602 and $26,830, respectively, using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the District increases its risk of awarding federal funds to contractors who 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 the costs. Recommendation We recommend the District strengthen internal controls to verify all contractors it pays $25,000 or more, all in part with federal funds, are not suspended or debarred from participating in federal programs, and maintains documentation demonstrating this verification. District’s Response The District will strengthen 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 maintains documentation demonstrating this verification. 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. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. 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.

The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. 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/0135508 COVID-19 84.425D/0145091 COVID-19 84.425U/0138222 COVID-19 84.425W/0459633 COVID-19 84.425D/0144030 COVID-19 84.425D/0142530 COVID-19 84.425D Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A 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 2023, the District spent a total of $1,712,342 of its ESF awards. This included $332,127 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,366,872 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U) and $13,343 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). 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 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 funds 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 contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors 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 2023 school year, the District spent $358,900 for payments to one contractor for a project including the purchase and installation of two portables. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not collect weekly certified payroll reports from all contractors and subcontractors to confirm they paid laborers the proper prevailing wages. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District experienced turnover in the position responsible for managing this project and current staff could not locate the weekly certified payrolls. Effect of Condition Without adequate internal controls to ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District did not collect weekly certified payroll reports for any of the three weeks contractors performed work on the project. During the audit, the District subsequently collected all weekly certified payrolls. Recommendation We recommend the District establish internal controls to ensure compliance with federal wage rate requirements. This should include obtaining the federal certified payroll reports, implementing effective monitoring processes to collect and review all weekly certified payroll reports from contractors and subcontractors. Additionally, we recommend the District provide additional training to ensure staff overseeing compliance with federal programs are aware of all applicable requirements. District’s Response Corrective actions for ensuring compliance with federal wage requirements. 1) Maintain detailed documentation of all wage rate determinations, calculations, and payments made to employees by verifying contractors certified weekly payrolls. 2) Print and maintain all certified payrolls from the L&I website, contractors, sub-contractors and maintain copies onsite with awarded contract. 3) Provide training to employees involved in contracting on federal wage rate requirements to ensure they are aware of their responsibilities. 4) Monitor changes in federal wage rate requirements and update internal controls accordingly to stay compliant. 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. Office of the Washington State Auditor sao.wa.gov 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 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.

2022-001 The District did not have adequate controls for ensuring compliance with federal requirements for allowable costs and cost principles. Assistance Listing Number and Title: 84.425 – COVID-19 – Education Stabilization Fund 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: COVID-19, 84.425D – 0135566 COVID-19, 84.425D – 0120018 COVID-19, 84.425D – 0120423 COVID-19, 84.425U – 0138222 COVID-19, 84.425U – 0137228 COVID-19, 84.425D – 0140519 Known Questioned Cost Amount: $240,700 Prior Year Audit Finding: Yes Description of Condition The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $2,248,620 of its ESF awards, which included $1,350,865 from the Elementary and Secondary School Emergency Relief (ESSER II) Fund subprogram (84.425D), as well as $897,755 from 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 program requirements and monitoring the effectiveness of established program controls. The Office of Superintendent of Public Instruction (OSPI) requires the District to incur allowable costs before requesting reimbursement. The District must maintain documentation supporting the costs it charges to the program. The documentation must be sufficient to demonstrate compliance with program requirements. Our audit found the District’s internal controls were inadequate for demonstrating that costs charged to the program were allowable and complied with program requirements. Specifically, the District did not maintain supporting documentation for some of the accounts payable and payroll transactions charged to the program. We consider this deficiency in internal controls to be a material weakness. Cause of Condition The District experienced turnover in its staff responsible for managing program costs. As a result, the current staff were unable to find supporting documentation for some expenditures charged to the program. Effect of Condition and Questioned Costs Without supporting documentation, the District cannot demonstrate it has effective internal controls in place to ensure compliance with requirements for allowable costs and cost principles. We identified $36,996.29 of unsupported payroll costs and $203,704 of unsupported accounts payable costs. Without support, we cannot confirm the expenditures charged to the program were allowable, so we are questioning these costs. Recommendation We recommend the District establish and maintain internal controls to ensure it keeps documentation to demonstrate that costs charged to federal programs are supported, allowable and comply with cost principles. District’s Response Hiring of a dedicated accounts payable staff member to ensure all documents are attached, two signatures and filed so that in the future when there is turn over all documentation are together, filed and ready for review. Cash-Handling SOP has been established and is reviewed by at least two staff members and a form is submitted. Secondly, the duties of the grants will be split for the purpose of having two members reviewing the grants and verifying expenditures. For the purpose of the grants, the first person will write, revise, track the grant. The second person will make the claims after meeting and reviewing expenditures reports and supporting documentation with verification of two signatures. Both staff members will meet to discuss revisions and if an expenditure does not qualify in the grant. The district has created SOP to establish an ongoing expectation of standards for staff and new staff members. 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 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2021-001 The District did not have adequate controls for ensuring compliance with federal requirements for cash management, allowable costs and cost principles. Assistance Listing Number and Title: 84.425 ? COVID-19 ? Education Stabilization Fund 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: COVID-19, 84.425D ? 0120018 COVID-19, 84.425D ? 0120423 Known Questioned Cost Amount: $15,163 Description of Condition The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2021, the District spent $692,390 of its ESF awards, which included funds from the Elementary and Secondary School Emergency Relief (ESSER I and II) Fund subprogram (84.425D). 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 established program controls. The Office of Superintendent of Public Instruction?s (OSPI) grant system (iGrants) and claims system operates on a reimbursement basis. This means the District is required to incur and pay for eligible and allowable costs before requesting reimbursement. The District is also required to maintain documentation supporting its reimbursement requests and costs charged to the program. The documentation should be sufficient to demonstrate compliance with program requirements. Cash Management Our audit found the District?s internal controls were inadequate for demonstrating it had incurred and paid for program costs before requesting reimbursement. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Allowable Costs and Cost Principles Our audit also found the District?s internal controls were inadequate for demonstrating that costs charged to the program were allowable and complied with program requirements. Specifically, the District did not maintain supporting documentation for all accounts payable transactions. We consider this deficiency in internal controls to be a significant deficiency. The issue was not reported as a finding in the prior audit. Cause of Condition Cash Management The District experienced turnover in its staff responsible for managing and submitting program cost reimbursements. As a result, the current staff were unable to locate supporting documentation for the reimbursements the District submitted during the audit period. Allowable Costs and Cost Principles The District experienced turnover in its staff responsible for managing program costs. As a result, the current staff were unable to locate supporting documentation for some expenditures charged to the program. Effect of Condition Cash Management Without supporting documentation, the District cannot demonstrate it has effective internal controls in place to ensure compliance with federal cash management requirements. We examined all reimbursement requests for eligible program costs totaling $692,390, and the District could not provide supporting documentation to demonstrate it had incurred and paid for these costs before submitting its reimbursement requests. Allowable Costs and Cost Principles Without supporting documentation, the District cannot demonstrate it has effective internal controls in place to ensure compliance with requirements for allowable costs and cost principles. We identified four transactions, totaling $15,163 in unallowable payments, that were not adequately supported. Based on a projection of our nonstatistical sample, we identified $65,200 in estimated overpayments and an estimated $1,369 in associated unallowable indirect costs. Without support, we cannot confirm the expenditures charged to the program were allowable. As such, we are questioning these costs. Recommendation We recommend the District establish and follow internal controls to ensure it maintains documentation to demonstrate it incurred and paid for program costs before requesting federal reimbursement, and that costs are supported, allowable and comply with cost principles. District?s Response Hiring of a dedicated accounts payable staff member to insure all documents are attached, two signatures and filed so that in the future when there is turn over all documentation are together, filed and ready for review. Cash-Handling SOP has been established and is reviewed by at least two staff members and a form is submitted. Secondly, the duties of the grants will be split for the purpose of having two members reviewing the grants and verifying expenditures. For the purpose of the grants, the first person will write, revise, track the grant. The second person will make the claims after meeting and reviewing expenditures reports and supporting documentation with verification of two signatures. Both staff members will meet to discuss revisions and if an expenditure does not qualify in the grant. The district has created SOP to establish an ongoing expectation of standards for staff and new staff members. 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 200, Uniform Guidance, section 305, Federal payment, establishes requirements for the method of reimbursement and disbursement of Federal funds by non-federal entities. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs. 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.

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION