EIN: 916006768
UEI: MFMZU6VK8HN5
Data as of August 22, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on May 27, 2025. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by November 27, 2025 (269 days ago).
What is a management decision? →2024-001 The District did not have adequate internal controls and did not comply with time-and-effort requirements. Assistance Listing Number and Title: 84.010 – Title I Grants to Local Education Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: GT-01224 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background 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 reside in areas with high concentrations of children from low-income families. During fiscal year 2024, the District spent $1,582,423 in federal funds from Title I. 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. The District is responsible for ensuring it supports all payroll costs charged to the program with adequate time-and-effort documentation, as required by federal regulations and the awarding agency. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report, such as a detailed timesheet. Time-and-effort documentation must also be signed and dated after the work is completed. Description of Condition The District’s internal controls were ineffective for ensuring it supported all salaries and benefits it charged to the program with appropriate time-and-effort documentation, as federal regulations and the Office of Superintendent of Public Instruction (OSPI) require. 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 key position that was responsible for collecting time-and-effort documentation. The employee responsible during the fiscal year did not have adequate knowledge of the OSPI time-and-effort requirements needed to effectively review time-and-effort documentation and ensure compliance with applicable federal requirements. Effect of Condition The District did not obtain adequate time-and-effort documentation for five employees whose salaries, benefits and associated indirect costs totaling $578,986 it charged to the program. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the awarding agency’s documentation requirements to support costs charged to federal programs. During the audit, the District supported these payroll costs by providing alternative documentation to show the employees worked on the program; therefore, we are not questioning these costs. Recommendation We recommend the District strengthen and follow internal controls to ensure employees understand time-and-effort requirements and that it complies with federal and OSPI requirements for obtaining signed time-and-effort documentation timely. District’s Response Central Kitsap School District concurs with the issued finding. Although time and effort documentation was received from all employees whose salaries were charged to the program, CKSD did not ensure the correct forms, certifying the full time period, were received from those employees certifying on a semi-annual basis. Procedures will be modified to ensure time and effort participants are educated on the requirements and are completing the correct forms timely. Procedures will also ensure key personnel receive proper training on time and effort policies and requirements. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken 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, 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, Guidelines for Charging Employee Compensation to Federal Grants establishes requirements for documenting time-and-effort, including fixed schedule systems.
Show full finding ▾Hide full finding ▴2024-001 The District did not have adequate internal controls and did not comply with time-and-effort requirements. Assistance Listing Number and Title: 84.010 – Title I Grants to Local Education Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the Superintendent of Public Instruction (OSPI) Pass-through Award/Contract Number: GT-01224 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background 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 reside in areas with high concentrations of children from low-income families. During fiscal year 2024, the District spent $1,582,423 in federal funds from Title I. 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. The District is responsible for ensuring it supports all payroll costs charged to the program with adequate time-and-effort documentation, as required by federal regulations and the awarding agency. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or a monthly personnel activity report, such as a detailed timesheet. Time-and-effort documentation must also be signed and dated after the work is completed. Description of Condition The District’s internal controls were ineffective for ensuring it supported all salaries and benefits it charged to the program with appropriate time-and-effort documentation, as federal regulations and the Office of Superintendent of Public Instruction (OSPI) require. 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 key position that was responsible for collecting time-and-effort documentation. The employee responsible during the fiscal year did not have adequate knowledge of the OSPI time-and-effort requirements needed to effectively review time-and-effort documentation and ensure compliance with applicable federal requirements. Effect of Condition The District did not obtain adequate time-and-effort documentation for five employees whose salaries, benefits and associated indirect costs totaling $578,986 it charged to the program. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the awarding agency’s documentation requirements to support costs charged to federal programs. During the audit, the District supported these payroll costs by providing alternative documentation to show the employees worked on the program; therefore, we are not questioning these costs. Recommendation We recommend the District strengthen and follow internal controls to ensure employees understand time-and-effort requirements and that it complies with federal and OSPI requirements for obtaining signed time-and-effort documentation timely. District’s Response Central Kitsap School District concurs with the issued finding. Although time and effort documentation was received from all employees whose salaries were charged to the program, CKSD did not ensure the correct forms, certifying the full time period, were received from those employees certifying on a semi-annual basis. Procedures will be modified to ensure time and effort participants are educated on the requirements and are completing the correct forms timely. Procedures will also ensure key personnel receive proper training on time and effort policies and requirements. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken 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, 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, Guidelines for Charging Employee Compensation to Federal Grants establishes requirements for documenting time-and-effort, including fixed schedule systems.
Finding ref number: 2024-001 Finding caption: The District did not have adequate internal controls and did not comply with time-and-effort requirements. Name, address, and telephone of District contact person: Scott McDaniel, Executive Director of Business and Operations or Lara Christopherson, Assistant Director of Business and Payroll P.O. Box 8 Silverdale, WA 98383 (360) 662-1650 Corrective action the auditee plans to take in response to the finding: 1. Student Supports Office Manager will ensure each staff member requiring time and effort certification is provided with the correct time and effort forms for semiannual or monthly certifications. 2. Student Supports Office Manager tracks time and effort certifications monthly on a spreadsheet; checking for completion, verifying the correct form was used, correctly dated by all parties, and returned within 30 days following the end of the reporting period. The Departmental Administrator will be notified if an employee has not returned a time and effort certification so they can follow-up and address the deficiency. 3. Student Supports Office Manager will review completed time and effort certifications on a monthly basis with the departmental administrator. 4. Student Supports will develop a time and effort training regarding procedures and the importance of completing time and effort certifications. This will ensure all required staff members understand what they need to report and why we need it completed. Time and effort training and detailed instructions will be provided at the beginning of each school year. Anticipated date to complete the corrective action: 09/30/2025
2024-002 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 Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the 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 Program and National School Lunch Program. These programs provide free and reduced-price meals to students from low-income families. The District received $3,095,746 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 the 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 Although the District has a process to verify the suspension and debarment status for contractors it pays more than $25,000, our audit found the District did not follow this process and did not verify one of four contractors was not suspended or debarred before purchasing from them. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District piggybacked on another agency’s contract. District staff said they were aware of requirements and that the lead agency renewed the contract in May 2023. However, they did not verify and retain documentation showing the contractor was not suspended or debarred at the time of the contract renewal, as required. Effect of Condition The District did not obtain a written certification from the contractor, insert a clause into the contract or check for exclusion records at SAM.gov to verify the contractor it paid $233,250 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the District increases its risk of awarding federal funds to contractors that 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. The District subsequently verified the contractor was not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the District strengthen its 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 maintain documentation demonstrating compliance with this requirement. District’s Response Central Kitsap School District concurs with the issued finding. Although CKSD piggybacked on a contract through another district that did obtain a suspension and debarment certification, we were not provided and/or did not obtain the suspension and debarment certification. While we tried to do our own verification of the vendor’s status, the correct records were not available on the SAM.gov site for this particular vendor. Procedures will be updated to ensure suspension and debarment checks are included with contracts using federal funding sources when routed for approval and retained by the district. CKSD will provide annual training to all staff purchasing with federal funding to include how to conduct a suspension and debarment verification. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken 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 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
Show full finding ▾Hide full finding ▴2024-002 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 Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: Office of the 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 Program and National School Lunch Program. These programs provide free and reduced-price meals to students from low-income families. The District received $3,095,746 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 the 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 Although the District has a process to verify the suspension and debarment status for contractors it pays more than $25,000, our audit found the District did not follow this process and did not verify one of four contractors was not suspended or debarred before purchasing from them. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District piggybacked on another agency’s contract. District staff said they were aware of requirements and that the lead agency renewed the contract in May 2023. However, they did not verify and retain documentation showing the contractor was not suspended or debarred at the time of the contract renewal, as required. Effect of Condition The District did not obtain a written certification from the contractor, insert a clause into the contract or check for exclusion records at SAM.gov to verify the contractor it paid $233,250 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the District increases its risk of awarding federal funds to contractors that 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. The District subsequently verified the contractor was not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the District strengthen its 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 maintain documentation demonstrating compliance with this requirement. District’s Response Central Kitsap School District concurs with the issued finding. Although CKSD piggybacked on a contract through another district that did obtain a suspension and debarment certification, we were not provided and/or did not obtain the suspension and debarment certification. While we tried to do our own verification of the vendor’s status, the correct records were not available on the SAM.gov site for this particular vendor. Procedures will be updated to ensure suspension and debarment checks are included with contracts using federal funding sources when routed for approval and retained by the district. CKSD will provide annual training to all staff purchasing with federal funding to include how to conduct a suspension and debarment verification. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken 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 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
Finding ref number: 2024-002 Finding caption: The District did not have adequate internal controls and did not comply with federal suspension and debarment requirements. Name, address, and telephone of District contact person: Scott McDaniel, Executive Director of Business and Operations or Lara Christopherson, Assistant Director of Business and Payroll P.O. Box 8 Silverdale, WA 98383 (360) 662-1650 Corrective action the auditee plans to take in response to the finding: CKSD will provide annual training for all staff tied to federal funding purchasing. This will include conducting SAM.gov checks on any purchase of goods or services that may meet or exceed $25,000 in total cost prior to entering into contracted services or the purchase of goods. CKSD will create a training video, made available under Business Office Tutorial Videos on staff intranet, on how to conduct an entity search for a suspension and debarment check on the SAM.gov website, as a point of reference for staff members. CKSD will ensure staff doing any federal purchasing have a SAM.gov login. CKSD will require suspension and debarment records to be included with contracts using federal funds when routed for approval. CKSD will implement a process for retaining suspension and debarment check records. This may include attaching a copy of the SAM.gov check to purchase order or credit card reconciliations report. CKSD will explore alternative purchasing cooperatives, to utilize, that provide direct access to all bid/contract documents for real time review and evaluation of compliancy. Anticipated date to complete the corrective action: 09/30/2025
FAC accepted this audit on April 2, 2023 — management decision was due October 2, 2023.
2022-002 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.041 ? Impact Aid Federal Grantor Name: Office of Elementary and Secondary Education, U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Background 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, with additional funds provided for certain federally connected children with disabilities. During the 2021-2022 school year, the District received $16,655,945 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. 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 money 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 contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor 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 The District hired contractors for three projects?one to implement improvements at a high school, one to design and build a new middle school, and one to replace the roofs at two buildings. During the 2021-2022 school year, the District paid contractors about $9.5 million from its Impact Aid award for work on these projects. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: ?Include the required prevailing wage rate clauses in the contracts with two of the contractors ?Collect weekly certified payroll reports from the contractors and their subcontractors to confirm they paid laborers proper prevailing wages We consider these deficiencies 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 District management lacked oversight of contracts to ensure that the required prevailing wage language was included in its entirety for all projects receiving federal funding. Additionally, the District relied on contractors and subcontractors to submit weekly certified payrolls to the Washington State Department of Labor and Industries (L&I) website. Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors, this process was not documented. Further, staff did not know the District needed to obtain all certified payroll reports each week. Effect of Condition Without adequate internal controls that ensure it includes the prevailing wage rate clauses in its contracts and collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. During the audit period, the District was required to collect certified payroll reports from contractors and subcontractors on three projects. We tested two contractors and seven subcontractors and found the District should have obtained a total of 133 weekly certified payroll reports, but did not collect any during the audit period. Although the District subsequently collected all weekly certified payroll reports that the contractors submitted to the L&I system, 127 of them only referenced state requirements and did not include federal prevailing wage rate requirements. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting the complete prevailing wage clauses into contracts and implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response The Central Kitsap School District concurs with this finding. 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 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, establish requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).
Show full finding ▾Hide full finding ▴2022-002 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.041 ? Impact Aid Federal Grantor Name: Office of Elementary and Secondary Education, U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Background 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, with additional funds provided for certain federally connected children with disabilities. During the 2021-2022 school year, the District received $16,655,945 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. 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 money 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 contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor 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 The District hired contractors for three projects?one to implement improvements at a high school, one to design and build a new middle school, and one to replace the roofs at two buildings. During the 2021-2022 school year, the District paid contractors about $9.5 million from its Impact Aid award for work on these projects. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: ?Include the required prevailing wage rate clauses in the contracts with two of the contractors ?Collect weekly certified payroll reports from the contractors and their subcontractors to confirm they paid laborers proper prevailing wages We consider these deficiencies 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 District management lacked oversight of contracts to ensure that the required prevailing wage language was included in its entirety for all projects receiving federal funding. Additionally, the District relied on contractors and subcontractors to submit weekly certified payrolls to the Washington State Department of Labor and Industries (L&I) website. Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors, this process was not documented. Further, staff did not know the District needed to obtain all certified payroll reports each week. Effect of Condition Without adequate internal controls that ensure it includes the prevailing wage rate clauses in its contracts and collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. During the audit period, the District was required to collect certified payroll reports from contractors and subcontractors on three projects. We tested two contractors and seven subcontractors and found the District should have obtained a total of 133 weekly certified payroll reports, but did not collect any during the audit period. Although the District subsequently collected all weekly certified payroll reports that the contractors submitted to the L&I system, 127 of them only referenced state requirements and did not include federal prevailing wage rate requirements. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting the complete prevailing wage clauses into contracts and implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response The Central Kitsap School District concurs with this finding. 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 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, establish requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).
Finding ref number: 2022-002 Finding caption: The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Name, address, and telephone of District contact person: Paula Bailey, Executive Director of Business Services P.O. Box 8 Silverdale, WA 98383 (360) 662-1650 Corrective action the auditee plans to take in response to the finding: In order to ensure compliance of wage rate requirements the district will ensure: 1. Weekly collection and review of Certified Payroll Reports (CPRs) with compliance statements for all active projects will be incorporated into the Capital Projects accounts payable process. 2. The CPRs collected will be accessible to all Capital Project staff members in electronic format as well as a newly created control document verifying the date of review and reviewer of each CPR submitted. 3. Requests for CPRs will be made to all contractors or subcontracts missing reports through the period for which work has been performed. 4. Monthly invoices and pay applications will not be processed until CPRs for the billing period are collected and reviewed. 5. CPR procedures will be included in the Pre-Construction Meeting Agenda for all projects with emphasis given to weekly CPR submittals. 6. Contracts will be reviewed to ensure applicable laws and regulations are included. 7. Ongoing contracts will be amended to include required federal language as required by Title 29 CFR, Section 5.5 Anticipated date to complete the corrective action: 8/31/2023
2022-003 The District overcharged indirect costs to the program and did not have adequate internal controls for ensuring compliance with 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: 84.425D-120442, 84.425D-130149, 84.425U-138108, 84.425U-137137, 84.425W-459516, 84.425U-140604, 84.425U-712302 and 84.425U-712146 Known Questioned Cost Amount: $34,682 Background 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 $6,243,051 of its ESF awards. This included $3,695,292 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,541,227 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $6,531 in the American Rescue Plan Elementary and Secondary School Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). 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. Allowable Costs/Cost Principles Federal regulations establish principles and standards for determining allowable direct and indirect costs for federal awards. The Office of Superintendent of Public Instruction establishes the indirect cost rate for each award, and districts cannot exceed this approved rate when claiming reimbursement. If there are changes to the rate during a multi-year award, districts must adjust the amount claimed, if needed, to ensure they do not exceed the approved rate. Wage Rate Requirements 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 money 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 contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor 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 Allowable Costs/Cost Principles Although the District?s internal controls were adequate for ensuring it materially complied with the program?s allowable activities and allowable costs requirements, the District charged the incorrect indirect cost rate for its ESSER II award. Wage Rate Requirements The District hired a contractor to update the heating, ventilation and air condition controls in three schools to improve air quality and circulation to prevent the spread of COVID-19. During the 2021-2022 school year, the District paid $627,519 from its ESSER II award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not collect weekly certified payroll reports from the contractor and its subcontractors to confirm they paid laborers proper prevailing wages. We consider this deficiency in internal controls to be a material weakness, which led to material noncompliance. These issues were not reported as a finding in the prior audit. Cause of Condition Allowable Costs/Cost Principles Management and staff did not know the District needed to manually adjust its OSPI-issued restricted indirect cost rate for ESSER awards that covered two fiscal years. Wage Rate Requirements The District relied on the contractor and subcontractors to submit weekly certified payroll to the Washington State Department Labor and Industries (L&I) website. Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractor, this process was not documented. Further, staff did not know the District needed to obtain all certified payroll reports each week. Effect of Condition and Questioned Costs Allowable Costs/Cost Principles The District charged $34,682 more in indirect costs than allowable because it did not charge the correct indirect cost rate for its ESSER II program. We are questioning these costs. Wage Rate Requirements Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractor and subcontractors did not pay prevailing wage rates to laborers working on the contracts. During the audit period, the District was required to collect certified payroll reports from contractors and subcontractors on one project. We tested the contractor and four subcontractors and found the District should have obtained 19 weekly certified payroll reports, but did not collect any during the audit period. Since the contractor and subcontractors had submitted all required payroll reports for the projects to L&I, the District subsequently collected them during our audit. Recommendation Allowable Costs/Cost Principles We recommend the District ensure it uses the correct OSPI-issued restricted indirect cost rate for the fiscal period when charging costs to the program. Wage Rate Requirements We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response The Central Kitsap School District concurs with this finding. 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. 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. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).
Show full finding ▾Hide full finding ▴2022-003 The District overcharged indirect costs to the program and did not have adequate internal controls for ensuring compliance with 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: 84.425D-120442, 84.425D-130149, 84.425U-138108, 84.425U-137137, 84.425W-459516, 84.425U-140604, 84.425U-712302 and 84.425U-712146 Known Questioned Cost Amount: $34,682 Background 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 $6,243,051 of its ESF awards. This included $3,695,292 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,541,227 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $6,531 in the American Rescue Plan Elementary and Secondary School Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). 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. Allowable Costs/Cost Principles Federal regulations establish principles and standards for determining allowable direct and indirect costs for federal awards. The Office of Superintendent of Public Instruction establishes the indirect cost rate for each award, and districts cannot exceed this approved rate when claiming reimbursement. If there are changes to the rate during a multi-year award, districts must adjust the amount claimed, if needed, to ensure they do not exceed the approved rate. Wage Rate Requirements 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 money 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 contractor and subcontractor comply with those requirements and the Department of Labor?s regulations. This includes a requirement for the contractor 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 Allowable Costs/Cost Principles Although the District?s internal controls were adequate for ensuring it materially complied with the program?s allowable activities and allowable costs requirements, the District charged the incorrect indirect cost rate for its ESSER II award. Wage Rate Requirements The District hired a contractor to update the heating, ventilation and air condition controls in three schools to improve air quality and circulation to prevent the spread of COVID-19. During the 2021-2022 school year, the District paid $627,519 from its ESSER II award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not collect weekly certified payroll reports from the contractor and its subcontractors to confirm they paid laborers proper prevailing wages. We consider this deficiency in internal controls to be a material weakness, which led to material noncompliance. These issues were not reported as a finding in the prior audit. Cause of Condition Allowable Costs/Cost Principles Management and staff did not know the District needed to manually adjust its OSPI-issued restricted indirect cost rate for ESSER awards that covered two fiscal years. Wage Rate Requirements The District relied on the contractor and subcontractors to submit weekly certified payroll to the Washington State Department Labor and Industries (L&I) website. Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractor, this process was not documented. Further, staff did not know the District needed to obtain all certified payroll reports each week. Effect of Condition and Questioned Costs Allowable Costs/Cost Principles The District charged $34,682 more in indirect costs than allowable because it did not charge the correct indirect cost rate for its ESSER II program. We are questioning these costs. Wage Rate Requirements Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractor and subcontractors did not pay prevailing wage rates to laborers working on the contracts. During the audit period, the District was required to collect certified payroll reports from contractors and subcontractors on one project. We tested the contractor and four subcontractors and found the District should have obtained 19 weekly certified payroll reports, but did not collect any during the audit period. Since the contractor and subcontractors had submitted all required payroll reports for the projects to L&I, the District subsequently collected them during our audit. Recommendation Allowable Costs/Cost Principles We recommend the District ensure it uses the correct OSPI-issued restricted indirect cost rate for the fiscal period when charging costs to the program. Wage Rate Requirements We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include implementing effective monitoring processes to collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response The Central Kitsap School District concurs with this finding. 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. 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. Title 29 CFR, Section 5.5 ? Contract provisions and related matters establishes the requirements for the contracting officer to insert in full any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).
Finding ref number: 2022-003 Finding caption: The District overcharged indirect costs to the program and did not have adequate internal controls for ensuring compliance with wage rate requirements. Name, address, and telephone of District contact person: Paula Bailey, Executive Director of Business Services P.O. Box 8 Silverdale, WA 98383 (360) 662-1650 Corrective action the auditee plans to take in response to the finding: To ensure correct indirect rate charges, the District will create a grant tracking sheet that will list all information needed to fill in the SEFA. The Grant tracking sheet will include: ? Grant Title ? Grant year ? Grant number ? Grant amount ? ALN number ? Granting agency ? Federal agency name ? Approved Indirect Rate In order to ensure compliance of wage rate requirements the district will ensure: 1. Weekly collection and review of Certified Payroll Reports (CPRs) with compliance statements for all active projects will be incorporated into the Capital Projects accounts payable process. 2. The CPRs collected will be accessible to all Capital Project staff members in electronic format as well as a newly created control document verifying the date of review and reviewer of each CPR submitted. 3. Requests for CPRs will be made to all contractors or subcontracts missing reports through the period for which work has been performed. 4. Monthly invoices and pay applications will not be processed until CPRs for the billing period are collected and reviewed. 5. CPR procedures will be included in the Pre-Construction Meeting Agenda for all projects with emphasis given to weekly CPR submittals. 6. Contracts will be reviewed to ensure applicable laws and regulations are included. 7. Ongoing contracts will be amended to include required federal language as required by Title 29 CFR, Section 5.5 Anticipated date to complete the corrective action: 8/31/2023
FAC accepted this audit on May 24, 2022 — management decision was due November 24, 2022.
Central Kitsap School District No. 401 September 1, 2020 through August 31, 2021 2021-001 The District did not have adequate internal controls for ensuring compliance with federal matching requirements. CFDA Number and Title: 12.556 ? Competitive Grants: Promoting K-12 Student Achievement at Military-Connected Schools Federal Grantor Name: U.S. Department of Defense Federal Award/Contract Number: HE1254-18-1-0027 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $50,499 Background During fiscal year 2021, the District spent $837,455 in federal funds from the U.S. Department of Defense through the Competitive Grants: Promoting K-12 Student Achievement at Military-Connected Schools program. This program provides resources for districts to meet the academic, social and emotional needs of the highly mobile, military-connected students in their communities. 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 internal controls. This grant award requires the District to provide $629,000 in non-federal matching funds by March 26, 2023, the end of the period of performance. As of August 31, 2021, the District has reported providing $246,907 in non-federal costs towards its match requirement. The matching funds must be from allowable and unrestricted sources, be incurred within the period of performance, and calculated in compliance with federal cost principles. Description of Condition The District?s controls were ineffective for ensuring costs claimed as matching funds met federal matching requirements. Our audit found the District reported matching funds that included costs incurred before the period of performance and costs that did not comply with cost principles. We consider this this deficiency in internal controls to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition The District did not establish an effective monitoring or review process by someone knowledgeable of the grant terms to ensure reported matching costs were from allowable sources, incurred during the period of performance, and calculated in compliance with cost principles. Additionally, the District experienced turnover in several positions responsible for determining and documenting the matching costs, but did not dedicate sufficient resources to ensure new staff were knowledgeable of grant requirements. Effect of Condition and Questioned Costs Of the $246,907 in matching funds reported as of August 31, 2021, our audit identified the following $50,499 of questioned costs: ? $42,066 in costs that were incurred before the period of performance ? $7,396 in costs that were claimed based on budgeted rather than actual pay rates ? $1,037 in costs that were claimed as matching funds twice Recommendation We recommend the District strengthen its internal controls for tracking and monitoring compliance with matching requirements. Specifically, the District should establish oversight of matching costs by someone knowledgeable of the grant requirements to ensure matching costs are from allowable sources, incurred within the period of performance, and calculated in compliance with cost principles. The District should also provide adequate training to staff responsible for determining and documenting the matching costs. District?s Response The Central Kitsap School District concurs with the finding. Procedures will be modified to include oversight of match reporting by the grant manager to ensure matching expenditures are allowable and properly documented. The District will ensure that all matching requirements are met before the end of the grant period. Auditor?s Remarks We thank the District for its cooperation and assistance during the audit and the steps it is taking to address this issue. 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 306 Cost sharing or matching, describes the requirements that must be met as part of the non-Federal entity?s cost sharing or matching. The Department of Defense grant award (HE1254-18-1-0027), requires the District provide $629,000 in non-federal funds for the period of performance of September 27, 2018, through March 26, 2023. The Department of Defense Educational Activity Division III: General Terms and Conditions ? Financial and Program Management Article VI ? Cost Sharing or Matching provides general guidance for matching including: ? Maintaining records from which one may verify that the contribution was made, and is: a. Allowable under the applicable cost principles and b. Allocable to the project or program and reasonable. ? Matching contributions must also conform to the other terms and conditions of this award, including the award-specific terms and conditions.
Show full finding ▾Hide full finding ▴Central Kitsap School District No. 401 September 1, 2020 through August 31, 2021 2021-001 The District did not have adequate internal controls for ensuring compliance with federal matching requirements. CFDA Number and Title: 12.556 ? Competitive Grants: Promoting K-12 Student Achievement at Military-Connected Schools Federal Grantor Name: U.S. Department of Defense Federal Award/Contract Number: HE1254-18-1-0027 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $50,499 Background During fiscal year 2021, the District spent $837,455 in federal funds from the U.S. Department of Defense through the Competitive Grants: Promoting K-12 Student Achievement at Military-Connected Schools program. This program provides resources for districts to meet the academic, social and emotional needs of the highly mobile, military-connected students in their communities. 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 internal controls. This grant award requires the District to provide $629,000 in non-federal matching funds by March 26, 2023, the end of the period of performance. As of August 31, 2021, the District has reported providing $246,907 in non-federal costs towards its match requirement. The matching funds must be from allowable and unrestricted sources, be incurred within the period of performance, and calculated in compliance with federal cost principles. Description of Condition The District?s controls were ineffective for ensuring costs claimed as matching funds met federal matching requirements. Our audit found the District reported matching funds that included costs incurred before the period of performance and costs that did not comply with cost principles. We consider this this deficiency in internal controls to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition The District did not establish an effective monitoring or review process by someone knowledgeable of the grant terms to ensure reported matching costs were from allowable sources, incurred during the period of performance, and calculated in compliance with cost principles. Additionally, the District experienced turnover in several positions responsible for determining and documenting the matching costs, but did not dedicate sufficient resources to ensure new staff were knowledgeable of grant requirements. Effect of Condition and Questioned Costs Of the $246,907 in matching funds reported as of August 31, 2021, our audit identified the following $50,499 of questioned costs: ? $42,066 in costs that were incurred before the period of performance ? $7,396 in costs that were claimed based on budgeted rather than actual pay rates ? $1,037 in costs that were claimed as matching funds twice Recommendation We recommend the District strengthen its internal controls for tracking and monitoring compliance with matching requirements. Specifically, the District should establish oversight of matching costs by someone knowledgeable of the grant requirements to ensure matching costs are from allowable sources, incurred within the period of performance, and calculated in compliance with cost principles. The District should also provide adequate training to staff responsible for determining and documenting the matching costs. District?s Response The Central Kitsap School District concurs with the finding. Procedures will be modified to include oversight of match reporting by the grant manager to ensure matching expenditures are allowable and properly documented. The District will ensure that all matching requirements are met before the end of the grant period. Auditor?s Remarks We thank the District for its cooperation and assistance during the audit and the steps it is taking to address this issue. 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 306 Cost sharing or matching, describes the requirements that must be met as part of the non-Federal entity?s cost sharing or matching. The Department of Defense grant award (HE1254-18-1-0027), requires the District provide $629,000 in non-federal funds for the period of performance of September 27, 2018, through March 26, 2023. The Department of Defense Educational Activity Division III: General Terms and Conditions ? Financial and Program Management Article VI ? Cost Sharing or Matching provides general guidance for matching including: ? Maintaining records from which one may verify that the contribution was made, and is: a. Allowable under the applicable cost principles and b. Allocable to the project or program and reasonable. ? Matching contributions must also conform to the other terms and conditions of this award, including the award-specific terms and conditions.
Finding ref number: 2021-001 Finding caption: The District did not have adequate internal controls for ensuring compliance with federal matching requirements. Name, address, and telephone of District contact person: Paula Bailey, Director of Business Services Central Kitsap School District PO Box 8 Silverdale, WA 98383 360.662.1650 Corrective action the auditee plans to take in response to the finding: ? Work with CTE department to identify allowable and documented matching costs. ? Adjust reporting to exclude unallowed costs ? Create a district procedure for the identification and review of matching costs to include: o Documentation Requirement o Procurement Requirements o Review by grant manager o Review by business director Anticipated date to complete the corrective action: September 2022
FAC accepted this audit on April 24, 2018 — management decision was due October 24, 2018.
GSA_MIGRATION
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GSA_MIGRATION
FAC accepted this audit on May 18, 2017 — management decision was due November 18, 2017.
GSA_MIGRATION
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GSA_MIGRATION
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