Morrow County School District No. 1

Morrow County School District #1 respectfully submits the following corrective action plan in response to deficiencies reported in our audit of fiscal year ended June 30, 2022. The audit was completed by the independent auditing firm Dickey and Tremper, LLP and reported the deficiencies listed below. US DEPARTMENT Of EDUCATION Education Stabilization Fund (ESF)- Elementary and Secondary School Emergency Relief (ESSER) Fund CFDA# 84.425D Material Weakness #2022-003 Auditor Discussion and Recommendation: Condition and criteria: The District should have control processes in place to ensure that allowable projects subject to prevailing wage requirements are performed under those requirements. There was one project that was subject to Federal prevailing wage requirements but did not get performed or documented for those requirements. Cause: The District did not have policies and procedures set up to monitor the prevailing wage requirements. Context and effect: The District has few capital projects funded by grant dollars, but there was one project for security improvements that fell under Federal prevailing wage guidelines. The proposal from the contractor said it included prevailing wage rates, but there was not an official contract found that would detail the prevailing wage requirements and we were unable to locate copies of certified payrolls indicating the District was not monitoring this requirement. The total cost of the project was $133,878 and included costs for the equipment and installation of the security enhancements. Auditor?s recommendation: We recommend the District update their policies and procedures to identify and monitor projects with Federal prevailing wage requirements. We also recommend contracts containing language applicable to Federal programs be prepared for all large projects. Management?s Plan of Action: Individuals Involved: Matt Combe, Superintendent/Management Gabriel Hansen, Chief Financial Officer/Business Manager Brandi Sweeney, Maintenance Coordinator Plan: The district will include in contracts language requesting the proper documentation of compliance with prevailing wage on contract using Federal programs. To monitor this requirement the district will request from contractors prevailing wage certifications if they are not received timely. Time Frame: Implement in contracts language stating request for documentation of compliance with prevailing wage laws completed by January 3, 2023 Implement review of certified payroll documents and request from contractors when not received completed by January 3, 2023.

Morrow County School District #1 respectfully submits the following corrective action plan in response to deficiencies reported in our audit of fiscal year ended June 30, 2022. The audit was completed by the independent auditing firm Dickey and Tremper, LLP and reported the deficiencies listed below. US DEPARTMENT Of EDUCATION Education Stabilization Fund (ESF)- Elementary and Secondary School Emergency Relief (ESSER) Fund CFDA# 84.425D Significant Deficiency #2022-004 Auditor Discussion and Recommendation: Condition and criteria: The District should have control processes in place to ensure that monitoring procedures are in place for large contracts. The District contracted work for the engineering and design of HVAC improvements. For 2 of 3 invoices, payments were made from summary invoices rather than from application and certification of payment. We also did not locate a specific contract for the project, just a proposal. When the application and certification of payments were received, there were errors and changes requiring final reconciliation and accruals. Cause: There were changes in personnel at the District during the year and the ESSER grant is fairly new to the District. In addition, the invoices from the contractor did not initially contain all of the required information. Context and effect: We reviewed 100% of the invoices for the project and $38,324 was accrued as a year end liability and additional expense when the final contractor billing was received. This affected both grant revenue and expenses and led to adjustments on the Schedule of Expenditures of Federal Awards (SEFA). Auditor?s recommendation: We recommend enhanced monitoring procedures for large contracts and that application and certification for payment be reviewed and approved by an official with knowledge of the project and status before payment is issued. We also recommend contracts containing language applicable to Federal programs be prepared for all large projects. Management?s Plan of Action: Individuals Involved: Matt Combe, Superintendent/Management Gabriel Hansen, Chief Financial Officer/Business Manager Brandi Sweeney, Maintenance Coordinator Plan: Management has assigned the Business manager review of contract request for payment prior to payment and also for the cutoff date for reporting. The Business manager will request from contractors any information needed to properly allocate payment to proper periods prior to payments being issued. Team meeting will be held to discuss the progress of projects for the district to keep all responsible properly informed. Time Frame: Re-establish payment procedures on contracts completed by January 3, 2023. Process of team meetings to discuss projects progress completed by January 3, 2023.

RESOLUTION TO ADOPT THE CORRECTIVE ACTION PLAN FOR THE JUNE 30, 2021 AUDIT FINDINGS - #2021-22-XX Morrow County School District #1 respectfully submits the following corrective action plan in response to deficiencies reported in our audit of fiscal year ended June 30, 2021. The audit was completed by the independent auditing firm Dickey and Tremper, LLP and reported the deficiencies listed below. The plan of action was adopted by the governing body at their meeting on February 14, 2022, as indicated by signatures below. Significant Deficiency #2021-001 Auditor Discussion and Recommendation: Condition and criteria: The District should have control processes in place to ensure that allowable costs are properly claimed and reported to the grantor in the correct period. The initial reimbursement requests and reports were corrected by management for timing and identification of allowable costs and additional costs were noted during the audit. Cause: There were several grant programs during the year with similar allowable costs related to COVID-19 and changing requirements as guidelines became available. In addition, the prior business manager was new to the position. Context and effect: The District requests reimbursement and reports costs under the ESSER I, ESSER II, and GEER portion of the programs. We performed tests of 100% of the requests and found that management had to correct the reports for timing and identification of additional allowable costs. Final costs claimed and reported appear to be allowable costs and management has notified the State of the changes and final amounts. Auditor?s recommendation: We recommend enhanced oversight and review of staff work and that additional procedures are put in place to assist in identification of costs and reporting. Management?s Plan of Action: Individuals Involved: Dirk Dirksen, Superintendent/Management Beth O?Hanlon, Chief Financial Officer/Management Jody Deardorff, Business Manager Vacant, Mid-Level Position Plan: Management reassigned financial reporting and grant reimbursement requests to a more experienced Business Manager. The Business Manager now reviews purchase requests for allowable grant expenditures and correct reporting. Purchases receive a second review after the payment is complete. Finally, Management has an open mid-level business staff position to supplement the work flow and oversight process. This mid-level position will prepare reimbursement requests and will be reviewed and processed by the Business Manager to ensure occurrence, completeness, and accuracy of the claims. Time Frame: Re-establish reimbursement processes completed by January 3, 2022 Policies/Procedures around the reimbursement process will be completed by March 31, 2022 (approximate timing of mid-level position being filled).

RESOLUTION TO ADOPT THE CORRECTIVE ACTION PLAN FOR THE JUNE 30, 2021 AUDIT FINDINGS - #2021-22-XX Morrow County School District #1 respectfully submits the following corrective action plan in response to deficiencies reported in our audit of fiscal year ended June 30, 2021. The audit was completed by the independent auditing firm Dickey and Tremper, LLP and reported the deficiencies listed below. The plan of action was adopted by the governing body at their meeting on February 14, 2022, as indicated by signatures below. Significant Deficiency #2021-002 Auditor Discussion and Recommendation: Condition and criteria: Program costs should be paid or expended before submitting a reimbursement request. Related to 2021-001 above, some of the costs claimed on the initial reimbursements and reports were from purchase orders, rather than paid expenses causing some reimbursements to be received prior to paying the costs or incurring the expense. Cause: There were several grant programs during the year with similar allowable costs related to COVID-19 and changing requirements as guidelines became available. In addition, the prior business manager was new to the position and some costs were paid off of initial purchase orders rather than paid invoices. Context and effect: The District requests reimbursement and reports costs under the ESSER I, ESSER II, and GEER portion of the programs. We performed tests of 100% of the requests and found that management had to correct all of the reports for ESSER I for timing issues, but by the time actual reimbursement had been received costs incurred exceeded the request. However, the District requested reimbursement of costs totaling $55,507 in January of 2021 under the GEER portion for costs that were not paid until March of 2021. The amount of earnings, if any, on the advanced funds would be insignificant, but procedures should be in place to ensure costs are paid or incurred prior to requesting reimbursement. Auditor?s recommendation: We recommend enhanced oversight and review of staff work and that additional procedures are put in place to ensure costs are paid prior to requesting reimbursement. Management?s Plan of Action: Individuals Involved: Dirk Dirksen, Superintendent/Management Beth O?Hanlon, Chief Financial Officer/Management Jody Deardorff, Business Manager Vacant, Mid-Level Position Plan: Management reassigned financial reporting and grant reimbursement requests to a more experienced Business Manager. The Business Manager now reviews purchase requests for allowable grant expenditures and correct reporting. Purchases receive a second review after the payment is complete. Finally, Management has an open mid-level business staff position to supplement the work flow and oversight process. This mid-level position will prepare reimbursement requests and will be reviewed and processed by the Business Manager to ensure occurrence, completeness, and accuracy of the claims. Time Frame: Re-establish reimbursement processes completed by January 3, 2022 Policies/Procedures around the reimbursement process will be completed by March 31, 2022 (approximate timing of mid-level position being filled).

Morrow County School District Corrective Plan to Findings and Questioned Costs 2019-2020 Significant Deficiency #2020-001 Auditor Discussion and Recommendation: Condition and criteria: The District should have controls in place over financial close and reporting process to ensure accurate and timely annual financial statements are produced. The journal entries and reconciliations performed by the accounting department should be approved by supervisory personnel and supported with proper documentation. There were delays and errors in reconciling and reviewing the general ledger accounts, several schedules required correction, and the review process did not catch the errors. Cause: There were changes in staff during the year and new staff in charge of the financial close. There were also delays in completing some processes due to COVID-19. Effect: Several underlying schedules supporting the financial statements required correction and an unusual number of journal entries were posted after the receipt of the audit trial balance. Auditor?s recommendation: We recommend that management review its monthly and year-end reporting processes to incorporate additional oversight and review of staff work. We further recommend that the District establish and follow a policy for reviewing year-end accounting entries and audit schedules in a timely manner. Management?s Plan of Action: Management will re-establish appropriate levels of oversight and review of the closing process. Management has reassigned closing activities to additional staff to ensure accuracy and timeliness. Time Frame: Re-establish closing processes completed by January 4, 2021 Policies/Procedures around Fiscal Year End Closing will be completed by February 5, 2021 Significant Deficiency #2020-002 Auditor Discussion and Recommendation: Condition and criteria: The District should have processes in place to ensure that activity for the ASB and Athletics accounts are properly reflected in the District?s records and in a timely manner. The ASB and Athletics account activity is decentralized and accounted for on QuickBooks at the individual schools and recorded in the District?s accounting system by adjusting journal entry. The entries to record the activity were not prepared until mid-October and there were corrections required to properly reflect the balances and activity. Cause: There were changes in staff during the year and new staff in charge of the financial close. There were also delays in completing some processes due to COVID-19. Effect: There were delays in reporting the information in the District?s accounting system and corrections to the entries to record the activity. Auditor?s recommendation: We recommend having a process to review and record the activity more than just at year end and that the process include a secondary review of the recording and serve as an internal double check of the proper activity and processes. In addition, we recommend that the activity be recorded in a timely manner and that additional oversight and review of staff work be incorporated. Management?s Plan of Action: Student body and athletic reconciliations and bank statements will be sent to the business manager monthly. Management will re-establish periodically reviewing student body and athletic accounts to ensure financial reporting transparency and accuracy. Time Frame: Re-establish process to review of ASB and Athletic accounts by February 8, 2021. Significant Deficiency #2020-003 Auditor Discussion and Recommendation: Condition and criteria: Management is required to provide a complete and accurate Schedule of Expenditures of Federal Awards (SEFA). There were significant corrections to the SEFA to properly report the amount of expenditures and to correctly categorize between grant programs. Cause: There was new staff in charge of preparing the SEFA and delays in closing the books leading to some inaccuracies. In addition, there were changes in guidance due to COVID-19 requiring changes to the SEFA. Effect: The SEFA provided for the audit was updated and corrected multiple times to accurately report expenditures. Auditor?s recommendation: We recommend additional training in reconciling the underlying records and preparing the SEFA. We also recommend enhanced oversight and review of staff work. Management?s Plan of Action: Management provided additional training on preparing the SEFA. Prior to the interim audit fieldwork for the 2021 audit, additional training and review will occur as a part of the closing process. Time Frame: SEFA training completed by December 30, 2020. Training will be re-occurring. Significant Deficiency # 2020-004 Auditor Discussion and Recommendation: Condition and criteria: The District must have control processes in place to ensure that allowable costs are not requested for reimbursement more than one time. The District was double reimbursed for the August 2019 meals for $22,453. The August claim form was crossed out saying ?Not paid ? Combined with September?, but it was actually submitted and reimbursement was received. The September claim form included corrected amounts for both August and September resulting in a double reimbursement for August. Cause: There were changes in program staff and staff in the business office. The cause appears to be an oversight by both program management and business office staff and expected revenue was not reconciled to the general ledger for that period. Context and effect: The District requests reimbursement for meals served on a monthly basis during the school year. We performed tests of 100% of the requests and found one request that was double reimbursed for $22,453. Auditor?s recommendation: We recommend that expected revenue be double checked and be reconciled to the amounts reported in the general ledger. We also recommend enhanced oversight and review of staff work. Management?s Plan of Action: Management will reconcile monthly claims submitted to the Oregon Department of Education with deposits monthly. Any discrepancies will be corrected in the month the claim is funded. Duplicate payment will be repaid to Oregon Department of Education. Time Frame: Monthly review of food service claims have been assigned and completed (January 14, 2020). Payment will be returned by February 26, 2021 (Waiting for instructions from ODE). Contact Information: Aaron Gosiak, Business Manager Morrow County School District Aaron.gosiak@imesd.k12.or.us (541) 966-3193