Shoreline School District No. 412

2019-001 The District did not have adequate internal controls in place to ensure compliance with federal Child Nutrition program verification requirements. "See Schedule of Findings and Questioned Costs for chart/table" Background During the 2018-2019 school year, the District received $1,390,935 in funding for the federal Child Nutrition program. The program provides funding to school districts to offer free and reduced-price meals to eligible low-income students whose households meet specific income requirements set by the U.S. Department of Agriculture. 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. Each school year, the District must select a sample of household applications and verify that family income information reported to the District is correct. The Office of Superintendent of Public Instruction (OSPI) instructs school districts how to verify program eligibility, including the number of applications and how to sample the applications. The District must review selected applicants? income documentation and confirm students are receiving correct benefits of free or reduced-price meals. Otherwise, the student is not eligible for the program and must pay for meals at full price. Description of Condition Although the District had a process in place to perform the annual verification, its internal controls were not effective to ensure it completed this process accurately. The District needed to verify the eligibility status for 13 households and to notify the applicants in writing of the income documents they must submit and the submission deadline to avoid termination of benefits. Our audit determined the District did not change the household eligibility status for two households that did not respond by the submission deadline. The students associated with the two applications were not eligible for free or reduced-price meals. We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District experienced turnover in the position responsible for verification of household applications and did not monitor to ensure the employee completed the process correctly. Effect of Condition and Questioned Costs Lack of proper internal controls over the verification process increases the risk that the District might provide free or reduced-price meals to children who are not eligible to receive them. In addition, the District could receive funding for households that do not qualify for free and reduced-price meals. We selected six household applications for testing and identified two households that did not provide the required income documentation by the submission deadline, and the students were not eligible for free or reduced-price meals. We estimate the District provided $315 in benefits to ineligible children for the two non-responsive households. Specifically, our audit identified the following instances of noncompliance: ? District staff did not receive income documentation from the first household until three months after the submission deadline. The District made manual adjustments to the student?s account that are unexplainable, and which caused the student to receive reduced-price meal benefits between the submission deadline and the date the household provided income records. Because the household did not provide income documentation when required, it was not eligible to receive reduced-price meals during this period. The District provided an estimated $159 in benefits to this household.? ? District staff did not receive income documentation from the second household and did not change the household?s benefit status from reduced price to full price until four months after the submission deadline. The District provided an estimated $156 in benefits to this household. Recommendation We recommend the District improve its internal controls and establish an adequate review of the income verification process to ensure it changes meal benefit status for ineligible households in accordance with OSPI and federal guidelines. District?s Response The District concurs with the weakness identified in the finding. The Food Service department has formalized procedures to improve compliance and oversight for the verification process. The individual responsible for verifying income eligibility has been trained in proper procedures, and administrators will verify the procedure is being properly followed in a timely manner. Auditor?s Remarks We appreciate the District?s commitment to resolve this issue 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. 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, establishes requirements for management of Federal awards to non- Federal entities. Title 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Schools, Section 6a, Verification requirements, establishes requirements for verifying eligibility of children for free and reduced price meal benefits and reporting results to the granting agency.

2019-002 The District did not have adequate internal controls in place to ensure compliance with Title I program requirements for assessment system security. "See Schedule of Findings and Questioned Costs for chart/table" 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 the 2018-2019 school year, the District spent $794,739 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 security 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 Although the District prepared and maintained the assurance forms and training logs for fiscal year 2019, it could not provide Test Security and Building Plans to show 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 experienced turnover in the Director of Assessment and Student Learning position, and the prior Director did not understand that the written Test Security and Building Plans were an assessment security requirement. Therefore, the District did not prepare written plans for the 2018-2019 school year. Effect of Condition Although the District provided its security policy, staff training assurance forms, and training logs for all its school buildings, we determined the District?s policy did not include the required components outlined in the Professional Standards & Security, Incident, and Reporting Guidelines (PIRG). Additionally, the District could not provide the Test Security and Building Plans for the school buildings. Without these written plans, the District could not show it complied with the assessment system security requirements. Recommendation We recommend the District develop policies and procedures to ensure it prepares and maintains required assessment security plans for each school building to demonstrate compliance with assessment test security requirements. District?s Response The District concurs with the finding that test security and building plans were not on file for the 2018-2019 fiscal year. All of the test security and building plans are on file for the 2019-2020 fiscal year. While the District did update a portion of its policy on Student Assessment and Program Evaluation in response to the prior exit item on this topic, additional procedures and policy edits will be recommended to ensure compliance with federal assessment system security requirements. Auditor?s Remarks We appreciate the District?s commitment to resolve this issue 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 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.