White Salmon Valley School District No. 405-17State Government

2021-001 The District did not have adequate internal controls for ensuring compliance with federal requirements for time-and-effort documentation. CFDA 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: 203607, 270206, 270883, 270205 Questioned Cost Amount: $0 Description of Condition 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 who reside in areas with high concentrations of children from low-income families. The District spent $6,591,470 in federal funds for its Title I program during fiscal year 2021. Employee salaries and benefits made up approximately 92 percent of program expenditures. Federal regulations require award 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 program controls. The District is responsible for ensuring it supports all payroll costs charged to the grant with adequate time-and-effort documentation, as federal regulations and the grantor require. Depending on the number and type of activities employees perform, time-and-effort documentation can be a semi-annual certification or monthly personnel activity report, such as a detailed timesheet. The District?s controls were ineffective for ensuring it obtained semi-annual certifications for the second half of the fiscal year for all 32 employees who worked full-time in the program. We consider this deficiency in internal controls to be a material weakness that led to material compliance. The issue was not reported as a finding in the prior audit. Cause of Condition The employee responsible for ensuring compliance with time-and-effort requirements was on leave when the District needed to obtain semi-annual certifications. At the same time, the District experienced turnover with the designated backup employee. Effect of Condition Our audit found the District did not obtain semi-annual certifications for the second half of the fiscal year for all 32 employees who worked solely in the program. Without proper time-and-effort records, the District cannot ensure grantors that $1,315,600 of payroll costs charged to the program were accurate or valid. During the audit, the District provided alternate documentation in the form of employee contracts that demonstrated the payroll costs it charged to the program were allowable. 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 time-and-effort documentation. Specifically, we recommend the District obtain time-and-effort documentation for all employees charging salaries and benefits to the Title I program. District?s Response The District agrees with the State Auditor?s Audit finding as explained in the Description and Cause of Condition. The District also agrees the payroll costs recorded to the program were accurate and allowable. This lapse in documentation collection represents an isolated incident due to the key employee who was responsible for this duty taking leave, further turnover in that position and the retirement of the staff member who regularly audits time and effort. Evergreen School District No. 114 is committed to meeting federal requirements for time and effort recordkeeping and has taken the following steps to ensure there is a system and controls in place to ensure grant funded employees attest to time and effort. 1) Additional training for the new employee who has taken the position as well as cross training another employee in that department. 2) Employing two time and effort trained Accountants to audit time and effort on a monthly rotating basis. 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 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, establishes requirements for documenting time and effort.

2021-002 The District did not have adequate internal controls for ensuring compliance with federal requirements for cash management. CFDA 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: 84.425D-120130, 84.425D-120408, 84.425U-137067 Questioned Cost Amount: $0 Description of Condition The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. The District spent $11,590,238 of its ESF awards during fiscal year 2021. This included $3,931,709 of its Elementary and Secondary School Emergency Relief Fund (ESSER) subprogram award funded by the Coronavirus Aid, Relief, and Economic Security (CARES) Act (ESSER I), $6,560,415 of its ESSER subprogram award funded by the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act (ESSER II), and $1,098,114 of its ESSER subprogram award funded by the American Rescue Plan Act (ARPA) (ESSER III). 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 Office of Superintendent of Public Instruction?s (OSPI) grant system (iGrants) and claims system operates on a reimbursement basis, meaning the District is required to incur and pay for eligible costs prior to requesting reimbursement. Our audit found the District?s internal controls were inadequate for ensuring it incurred and paid costs before submitting its reimbursement requests to OSPI. The District submitted claims for unrealized enrollment as lost revenues under its ESSER I subprogram award. However, because the District did not ensure it had incurred and paid the costs prior to submitting its reimbursement claims, this resulted in cash advances, which the awarding agency does not allow. We consider this deficiency in internal controls to be a material weakness that led to material compliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District attended multiple trainings and reviewed available guidance to ensure program funds were used for allowable purposes. However, District officials said they were not made aware that cash management requirements applied to the unrealized enrollment lost revenue claimed under the ESSER I subprogram and that they were required to incur and pay costs before requesting reimbursement. Effect of Condition Without adequate internal controls, the District cannot demonstrate it complied with the cash management requirements. Our audit found that the District claimed and received $2,457,401 in cash advances, which the granting agency does not allow. The District subsequently used the cash advances for allowable expenditures under the federal program. The District calculated interest earnings on these cash advances to be $6,196, and it would be liable for paying this interest to the grantor. Recommendation We recommend the District develop and follow internal controls to ensure it complies with federal and OSPI requirements for cash management. This should include ensuring it incurs and pays costs for claims related to loss revenues. Further, we recommend the District consult with OSPI about returning the interest earned on the cash advances. District?s Response The District relied on OSPI written guidance regarding claiming Esser funds based on Unrealized Enrollment that did not specifically state that it was only to be claimed for past expenditures. The guidance indicated that the funds `must be spent? on allowable activities. However, OSPI is now stating that all of their grants are to be claimed based on reimbursement basis only. There was no explanation given as to why this new method of claiming based on Unrealized Enrollment (not the reimbursement method) was made available that is unlike past practice. The District followed the written guidance exactly as presented by OSPI. The District also attended multiple trainings by OSPI on the implementation of the new Esser grants and was not made aware of this requirement at that time. In addition, the District would like to emphasize that all expenditures were accurate and allowable under the Federal Esser 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 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 2 CFR Part 200, Uniform Guidance, section 305, establishes cash management procedures for grants and contracts over federal programs and comply with federal program requirements, including instructions on returning interest earned over $500.

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