Sedro-Wolley School District No. 101Local Government

Sedro-Woolley School District No. 101 September 1, 2022 through August 31, 2023 2023-001       The District did not have adequate internal controls for ensuring compliance with allowable activities and costs and restricted purpose requirements. Assistance Listing Number and Title: 32.009, COVID-19 – Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: 145240 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A   Known Questioned Cost Amount: $395,009 Prior Year Audit Finding: Yes, Finding 2022-001                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 2023, the District spent $395,009 in ECF Program funds to purchase laptops and Wi-Fi hotspots services for students. 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 activities and costs ECF Program recipients may only seek reimbursement for eligible devices and services provided to students and staff with an unmet need. Recipients are prohibited from seeking reimbursement for eligible equipment and services used solely at the school or held for future use (for ein other wordsai.e., warehousing). Restricted purpose – unmet need When submitting applications to the Federal Communications Commission (FCC), schools only had to provide an estimate of their students’ and staff’s unmet need. However, when requesting reimbursement, the District could only request program funds for eligible equipment and services provided to students and school staff with actual unmet need. Description of Condition Allowable activities and costs/restricted purpose – unmet need The District estimated unmet need for eligible equipment and services when it applied for ECF Program funds. However, our audit found the District’s internal controls were ineffective for ensuring it documented the determination of actual unmet need and only requested reimbursement for equipment and services provided to students and school staff. Specifically, the District purchased laptops and Wi-Fi hotspots based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $395,009. However, the District did not maintain documentation showing it provided each laptop and Wi-Fi hotspot paid with program funds to a student with unmet need. Cause of Condition Allowable activities and costs/restricted purpose – unmet need As communicated in the prior audit finding, Ddistrict staff thought the determination of unmet need provided during the application process was sufficient to comply with this requirement. Since As the funding spanned two fiscal years, the District had already distributed devices and requested reimbursement before prior to identifying this issue in the prior audit. the prior audit identified this issue. ThereforeAs a result, the District they did not take additional action perform additional procedures during the reimbursement process to only request reimbursement for specific students with a documented unmet need. As communicated in the prior audit finding, the District thought the determination of unmet need provided during the application process was sufficient to comply with this requirement. Since the funding spanned two fiscal years, the District had already distributed devices and requested reimbursement before the prior audit identified this issue. The District did not take any additional action and  is waiting for audit resolution from the federal grantor. Effect of Condition and Questioned Costs Allowable activities and costs/restricted purpose – unmet need Because the District did not have documentation supporting whether it provided eligible equipment and services to students with actual unmet need, it cannot demonstrate compliance with the program’s requirements. Given the nature of the program and circumstances, it is likely that at least some of the equipment and services the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students’ actual unmet need means that all costs are unsupported. Since we do not have a reasonable basis for estimating how much of the District’s expenditures are allowable, we are questioning all unsupported costs. Federal regulations require the Office of the Washington State Auditor’s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures. Recommendation We recommend the District work with the granting agency to determine audit resolution. We further recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should request reimbursement only for eligible equipment and services provided to students with unmet need, and maintain documentation demonstrating compliance. District’s Response At the time of grant approval and award the District believed we met all conditions to expend this grant on computers and hotspots for students that were forced into remote learning due to Covid-19. Due to the large number of districts that received this finding, the state has approached the ECF Grantor to provide a waiver because the instructions related to unmet need were unclear to most. Moving forward, we have a full understanding of the requirements for unmet need and will expend future grants accordingly. Auditor’s Remarks We value our partnership with the District in striving for transparency in public service. When auditing federal programs of any kind, governments must provide documentation to substantiate that they met the award requirements. As is our practice and audit standards require, we will review the status of this finding during our next audit. SAO continues to advocate for clear, timely guidance from federal agencies. 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.

Sedro-Woolley School District No. 101 September 1, 2022 through August 31, 2023 2023-002       The District’s internal controls were inadequate for ensuring compliance with federal Title I grant requirements for assessment system security. Assistance Listing Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: FPG--2035/0270366 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 state academic standards and reside in areas with high concentrations of children from low-income families. During fiscal year 2023, the District spent $1,142,212 in Title I program funds. Federal regulations require recipients to establish and maintain internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. 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 them for all standardized tests. The Office of Superintendent of Public Instruction (OSPI) provides templates for all districts to document their test security and building plans for each assessment they administer. OSPI also provides detailed guidance and manuals on test security. Description of Condition The District did not have adequate controls in place to ensure it complied with assessment system security requirements. Specifically, the District did not retain adequate records showing teachers attended required training or followed required security procedures before and after administering assessments to students. We consider this internal control deficiency to be a material weakness. Cause of Condition The District does not have a centralized or consistent process for collecting and retaining assessment security documents. Some buildings provide their documents to the Administration Coordinator to retain, while some buildings retain their own documents. In addition, the District has experienced turnover in the Administration Coordinator role that is responsible for overseeing assessment procedures. Due to this turnover, the Administration Coordinator did not adequately monitor each building during the audit period to ensure the District retained the required records. Additionally, the District experienced turnover in its special education department, which normally provides training for the Washington Access to Instruction and Measurement (WA-AIM) assessment. Effect of Condition The District could not demonstrate it followed assessment security requirements in accordance with its security plan and OSPI’s policies and procedures. Of the seven assessments we tested, the District lacked two training logs and the pre-assessment and post-assessment assurance forms for the WA-AIM assessment. Recommendation We recommend the District improve internal controls and follow established policies and procedures to comply with OSPI’s assessment system security requirements. Specifically, the District should retain the required forms to demonstrate it has complied with assessment security measures. District’s Response There was not clarity on who was in charge of organizing the training, Training Log and tracking of assessment security Pre/Post testing forms for the Wa-Aim, WIDA, Smarter Balanced Assessment, and WCAS. Moving Forward the following duties will be implemented: Special Education Director:  Responsible for organizing the training, and collecting the Training Log and Pre/post test security forms for any staff proctoring the Wa-AIM. MLL  Director:  Responsible for organizing the training at the beginning of each year, and collecting the Training Log and Pre/post test security forms for any staff proctoring the WIDA. District Assessment Coordinator with/ support of building principals:  Responsible for organizing the training, and collecting the Training Log and Pre/post test security forms for any staff proctoring the SBA and WCAS. Auditor’s Remarks We thank the District for its commitment to resolving this issue. We will follow up on the status of this finding 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 20 U.S. Code section 6311(b)(2)(B)(iii) requires state and local education agencies to establish and maintain valid and reliable assessment systems, consistent with relevant professional and technical standards.

The District did not have adequate internal controls for ensuring compliance with allowable activities and costs and restricted purpose requirements. Assistance Listing Number and Title: 32.009, COVID-19 ? Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: 145240 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $825,481 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 $825,481 in ECF Program funds to purchase laptops and Wi-Fi hotspot services for students. 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 activities and costs ECF Program recipients may only seek reimbursement for the eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking reimbursement for eligible equipment and services purchased for use solely at the school or held for future use (i.e., warehousing). Restricted purpose ? unmet need When submitting applications to the Federal Communications Commission (FCC), schools only had to provide an estimate of their students? and staff?s unmet need. However, when requesting reimbursement, the District could only request program funds for eligible equipment and services provided to students and school staff with actual unmet need. Description of Condition Allowable activities and costs/restricted purpose ? unmet need The District estimated unmet need for eligible equipment and services when it applied for ECF Program funds. However, our audit found the District?s internal controls were ineffective for ensuring it requested reimbursement only for eligible equipment provided to students with a documented unmet need. Specifically, the District purchased laptops and Wi-Fi hotspot services based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $825,481. However, the District did not maintain documentation showing it provided each laptop or Wi-Fi hotspot service paid with program funds to a student with unmet need. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition Allowable activities and costs/restricted purpose ? unmet need District staff thought the determination of unmet need provided during the application process was sufficient to comply with this requirement. Therefore, they did not perform additional procedures during the reimbursement process to only request reimbursement for specific students with documented unmet need. Effect of Condition and Questioned Costs Allowable activities and costs/restricted purpose ? unmet need Because the District did not have documentation supporting whether it provided eligible equipment and services to students with actual unmet need, it cannot demonstrate compliance with the program?s requirements. Given the nature of the program and circumstances, it is likely that at least some of the equipment and services the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students? actual unmet need means that all costs are unsupported. Since we do not have a reasonable basis for estimating how much of the District?s expenditures are allowable, we are questioning all unsupported costs. Federal regulations require the State Auditor?s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures. Recommendation We recommend the District work with the granting agency to determine audit resolution. We further recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should request reimbursement only for eligible equipment and services provided to students with unmet need, and maintain documentation demonstrating compliance. District?s Response The District is not contesting this finding. However, we would like to share that we used this funding to provide laptop computers to any student that needed one during the Covid-19 shutdown. We were focused on delivering curriculum to students while they were at home and we misjudged how the unmet need would be calculated by the FCC. We stand by our decision and believe it was the right thing to do considering the circumstances. Auditor?s Remarks The State Auditor?s Office is sympathetic to the significant challenges the District faced during the COVID-19 pandemic, and deeply respects its commitment to student learning despite these challenges. SAO knows that in many cases, governments across Washington received significant pandemic-era federal funds without also receiving clear guidance on how to use them. Then, and now, SAO continues to advocate for clear, timely guidance from federal agencies to make sure Washington governments are not put in a difficult position at audit time. However, when auditing federal programs of any kind, governments must provide documentation to substantiate that they met the award requirements. As is our practice and audit standards require, we will review the status of this finding during our next audit. We value our partnership with the District in striving for transparency in public service. 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.

The District did not have adequate internal controls to ensure compliance with assessment system security requirements for its Title I program. CFDA Number and Title: 84.010 Title I 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 Pass-through Award/Contract Number: 203065, 270053 Questioned Cost Amount: $0 Background The program objective of Title I is to help local education agencies improve the teaching and learning of children who are at risk of not meeting academic standards and who reside in areas with high concentrations of children from low-income families. During fiscal year 2019, the District spent $915,434 in Title I program funds. Federal regulations require recipients of federal awards 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. 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 these policies and procedures for all standardized tests. The state Office of Superintendent of Public Instruction (OSPI) provides templates for all districts to document its Test Security and Building Plans for each assessment it administers. OSPI also provides detailed guidance and manuals on test security. Description of Condition The District did not have written Test Security and Building Plans in place for all standardized tests it administered, as OSPI required. The District did not have plans for any of the English Learning Proficiency Assessments (ELPA). However, it did have written plans in place for all Smarter Balanced Assessments and retakes. We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition District staff responsible for ELPA standardized testing were not aware OSPI required the District to have a formal written plan for each assessment and building to demonstrate compliance. Effect of Condition and Questioned Costs Without a documented plan, the District cannot demonstrate it implemented and complied with OSPI?s assessment security requirement for 10 of the 23 standardized tests it administered in fiscal year 2019. Recommendation We recommend the District improve internal controls and follow established policies and procedures to comply with OSPI?s assessment system security requirements. Specifically, the District should establish written test security plans for all standardized tests, as OSPI requires. District ?s Response We concur with the finding and have responded with a plan of action to ensure this doesn't happen again. Auditor?s Remarks We thank the District for its cooperation and assistance throughout 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. 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, and paragraph 11. 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, establishes requirements for management of Federal awards to non-Federal entities. Title 20 U.S. Code section 6311(b)(2)(B)(iii) requires state and local education agencies to establish and maintain valid and reliable assessment systems, consistent with relevant professional and technical standards.