SUNNYSIDE SCHOOL DISTRICTLocal Government

2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425 COVID19 – 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 – 120454 COVID 19, 84.425U – 138194 COVID 19, 84.425U - 137218 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 $7,418,568 of its ESF awards. This included $108,315 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (ALN 84.425D) and $7,310,253 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER III) subprogram (ALN 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 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. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 fiscal year, the District spent $3,489,891 for payments to one contractor to update the heating ventilation, and air conditioning (HVAC) system and for various improvements and repairs to its facilities. Our audit found the District did not have adequate controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not collect, or ensure the project manager collected, weekly certified payroll reports from the contractor and subcontractors. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The District does not normally use federal funds on public works projects. Although District staff were aware of the requirement to include the federal wage rate requirements in the contracts, they were unaware of the requirement to ensure project managers obtain and review certified payroll reports each week prior to payment. 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 could be liable for paying any additional wages if the contractor or subcontractors did not pay prevailing wage rates to laborers working on the contract. The District did not collect weekly certified payroll reports for one contractor and its subcontractors. Recommendation We recommend the District establish internal controls to ensure compliance with federal wage rate requirements. This should include implementing an effective monitoring process to collect and review all weekly certified payroll reports from contractor and subcontractors. District’s Response The District made sure the Federal Wage Rate requirements were in the contract as a requirement. The District relied on the contracted Architect to ensure these requirements were followed before the district received the pay application. The District now understands that a designated district program director should receive weekly certified payroll reports to ensure compliance. On the next project that requires Prevailing Wage Rates, the District will make sure to receive weekly certified payroll reports to ensure compliance. Auditor’s Remarks We appreciate the District’s commitment to resolving the issues identified above. We will follow up on the status of the finding during the next regularly scheduled 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 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.

2023-002 The District’s internal controls were inadequate for ensuring compliance with federal procurement and 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 Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The District participates in the School Breakfast, National School Lunch, Summer Food Service, and Fresh Fruit and Vegetable programs. The District received a total of $5,050,955 for these programs for the 2022–2023 school year. These programs provide funding for free and reduced-price meals for students of low-income families. 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. When using federal funds to purchase goods or services, governments must apply the more restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bidding process, depending on the cost of the purchase. Additionally, state and federal regulations allow local entities to bypass normal procurement laws through a process referred to as “piggybacking.” This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement. To comply with piggybacking requirements under state law, the entity must enter into this interlocal agreement before it purchases services or goods from the other entity’s bid contract. If the District uses such an agreement, federal regulations require it to confirm that the procurement methods the awarding agency followed met its own statutory procurement laws and followed regulations applicable to the District when selecting the contractor. Additionally, for the piggybacking transaction to be valid, the District must purchase goods or services from the contractor that the original entity awarded the contract to through its own procurement process. Federal requirements also prohibit grant recipients from contracting with or purchasing from contractors suspended or debarred from doing business with the federal government. Whenever the District enters into contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors have not been suspended, debarred or otherwise excluded. The District may verify this by collecting a written certification from the contractor or including a clause or condition in the contract that states the contractor is not suspended or debarred. Alternatively, the District may review the U.S. General Services Administration’s federal Excluded Parties List System (EPLS). The District must meet this requirement before entering into the contract, and must maintain documentation to demonstrate compliance. Description of Condition Procurement Our audit found District’s internal controls were inadequate for ensuring it complied with federal procurement requirements for two contractors participating in federal programs. The District paid $1,261,211 in program funds to one contractor it piggybacked through a purchasing cooperative. The District had an interlocal agreement allowing this arrangement, but did not have documentation available to confirm that it ensured the procurement methods the awarding agency followed met its own statutory requirements before purchasing. Additionally, the District did not have a process to ensure it only purchased products awarded through the awarding entities’ contracts. The District also paid $722,265 in program funds to one contractor for produce products. The District was able to provide evidence of formal competitive process by way of a notice of publication. However, the District did not have documentation available to confirm it followed the competitive bid process and selected the lowest qualified bidder. Suspension and Debarment Our audit found District’s internal controls were inadequate for ensuring it verified that four contractors were not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition The District experienced turnover among key staff responsible for procuring food products through these contracts, and the District was unable to locate files for review. Effect of Condition Procurement Without competitively procuring the services, the District cannot demonstrate it received the best price for the services it purchased or selected the most qualified contractors. Additionally, the District cannot demonstrate that it complied with federal regulations. We determined the purchases are allowable under the federal program; therefore, we are not questioning costs. Suspension and Debarment The District did not have documentation to prove that it obtained written certifications, inserted clauses into the contracts or checked the EPLS to verify four out of four contractors were not suspended or debarred before contracting with or purchasing from them. The District paid these contractors $2,269,915 during fiscal year 2023. Without adequate internal controls, the District cannot ensure the contractors it paid with federal funds are eligible to participate in federal programs. Any program funds that the District used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. We are not questioning costs because we subsequently verified that the contractors were not suspended or debarred. Recommendation We recommend the District strengthen internal controls over procuring goods and ensure compliance with federal requirements, as well as retain and maintain records of these processes for audit. Further, we recommend the District strengthen internal controls to ensure that all contractors it pays over $25,000 or more, all or in part with federal funds, are not suspended and debarred from participating in federal programs. Additionally, we recommend the District retain documentation to demonstrate this compliance. District’s Response The District believed they had complied with the suspension and department requirements and followed all of the bid document requirements for the Food Service Program. The District was unable to locate the specific documents related to the Food Service Program bid compliance. A recent leadership change resulted in a gap in knowledge about the previous filing system. The District thoroughly searched the former director's computer and potential filing locations, but unfortunately, didn’t find them. Going forward the Food Service Department will create a dedicated binder for these documents and place the binder in a location easily accessible to both the Director of Food Service and Administrative Assistant. Food Service will also provide copies to the Fiscal Department for their own binder. Auditor’s Remarks We appreciate the District’s commitment to resolving the issues identified above. We will follow up on the status of the finding during the next regularly scheduled 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 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. 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.

Sunnyside School District No. 201 September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 32.009 ? COVID-19 ? Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: ECF202113007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Background The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as ?unmet need.? In fiscal year 2022, the District spent $189,226 in ECF Program funds to purchase bus Wi-Fi hotspots for students and school staff. 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. When using ECF Program funds to purchase eligible services and equipment, the FCC requires recipients to comply with all applicable state, local, or tribal laws by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase. State law and District policy allow for the purchase of goods and services from contracts awarded by another government or group of governments via an interlocal agreement or contract, a process often referred to as ?piggybacking.? To comply with piggybacking law, the entity must enter into this interlocal agreement before it purchases services or goods from the other entity?s bid contract. Description of Condition Our audit found the District?s internal controls were ineffective for ensuring it followed state law and its own policy when procuring equipment that it charged to the ECF Program. The District paid one service provider $189,226 for bus Wi-Fi hotspots, and did not ensure it entered into an interlocal agreement with the cooperative that bid the purchase. We consider this internal control deficiency to be a material weakness. The issue was not reported as a finding in the prior audit. Cause of Condition Staff responsible for the purchase did not know the District must have an interlocal agreement in place before piggybacking onto the cooperative?s bid. Effect of Condition The District spent $189,226 in program funds on a contract that another purchasing cooperative procured, but it did not have an interlocal agreement that allowed for piggybacking with the lead agency. Since the District did not enter into an interlocal agreement with the lead agency that allowed for piggybacking, state law would have required it to competitively procure the purchase. Without an effective internal control to ensure it follows procurement or piggybacking procedures, the District cannot demonstrate it complied with applicable state and local procurement requirements and received the best price for the bus Wi-Fi hotpots. Recommendation We recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should comply with state law and its own policy when procuring goods and services paid with ECF Program funds, and keep documentation supporting the procurement methods it used. District?s Response The Sunnyside District contracts with WSIPC to use their financial system. We thought we were part of the WSIPC purchasing program since we were part of the WSIPC program. From this audit we now know that we need to have an interlocal agreement with WSIPC to use the WSIPC Purchasing Program. We?ve emailed the person in charge of the program to complete an Interlocal Agreement. Auditor?s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue 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 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.

2019-001 The District lacked adequate internal controls to ensure compliance with federal Title I requirements for assessment system security. CFDA Number and Title: 84.010 Title I, Part A, Grants to Local Educational Agencies Federal Grantor Name: 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: 203194, 270001, 0270747, 0271013 Questioned Cost Amount: N/A Background The federal Title I program?s objective is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. During fiscal year 2019, the District spent $2,333,575 through the Title I program. 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 program controls. State tests are based on the K-12 learning standards, and students are tested in English language arts, math and science. Assessments measure students? learning, including the critical-thinking and problem-solving aspects of the new standards. Results from these tests are intended to allow not only accountability for schools and districts but also for states to be compared with each other in a fair system. States, in consultation with school districts, must establish and maintain an assessment system that is valid, reliable and consistent with relevant professional and technical standards. States must have formal, well-documented policies and procedures to maintain test security and ensure that districts implement those policies and procedures. OSPI provides example templates for districts to document their Test Security and Building Plans and also provides and updates standardized assurance forms and training logs yearly to ensure school districts are following the prescribed requirements and understand any new requirements to follow when administering assessments to students. To demonstrate compliance, districts must maintain the written Test Security and Building Plans, assurance forms and training logs. Description of Condition The District did not keep its Test Security and Building Plans, training assurance forms and training logs to demonstrate that each school building implemented test security measures. We consider this internal control deficiency to be a material weakness. The issue was not reported as a finding in the prior audit. Cause of Condition The District mistakenly shredded the documents supporting the administration of state assessments. Effect of Condition and Questioned Costs The District could not provide the Test Security and Building Plans for eight school buildings or the staff training assurance forms and training logs for six school buildings. Without these documents, the District could not demonstrate it complied with the assessment system security requirements. Recommendation We recommend the District develop policies and procedures to keep and safeguard the required assessment security plans and forms completed for each school building to demonstrate compliance with assessment test security requirements. District?s Response The District has procedures in place for assessment security. In the year that was audited the staff training assurance forms inadvertently were shredded along with testing materials that needed to be shredded after testing. The District will make sure after testing is finished that these forms won?t be shredded. Auditor?s Remarks We appreciate the District?s commitment to resolving this issue and 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 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (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 20 U.S. Code section 6311(b)(2)(B)(iii) requires state and local education agencies to establish and maintain a valid, reliable assessment systems, consistent with relevant professional and technical standards.

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