Multnomah Education Service DistrictLocal Government

Indirect rate on a portion of federal grant 84.027 Special Education (IDEA) Cluster funding. a. Type of deficiency: Significant Deficiency i Condition: The District’s controls did not detect and correct an improper indirect cost rate applied to the federal program on a timely basis. A significant deficiency in controls over compliance with allowable cost requirements was identified. ii. Cause: The District changed from being a contractor to a subrecipient for the fiscal year ended June 30, 2024. This change resulted in a different allowable indirect cost rate. iii. Effect or potential effect: Prior to correcting, the District had $878 of indirect charges in excess of the allowable rate charged to the federal program. iv. Questioned costs: As the District corrected the error, there appears to be no remaining questioned costs. v. Context: The District’s accounting system used an incorrect cost rate for indirect charges prior to correcting. vi. Recommendation : The District should ensure that controls related to indirect cost charges are implemented and operating effectively. b. Plan of acti on: The Grant Manager will be directed to create sufficient internal controls to confirm indirect rates in the accounting system match grant award agreements. c. Date of implementation: November 27, 2024

Suspension and debarment for purchase with 84.027 Special Education (IDEA) Cluster funds. a. Type of deficiency: Significant Deficiency i. Condition: The District did not verify that an entity was not suspended or debarred or otherwise excluded from participating in a covered transaction. A significant deficiency in controls over compliance with procurement requirements was identified. ii. Cause: The District utilized a purchase order rather than a contract for a transaction in excess of $25,000. iii. Effect or potential effect: Prior to entering into a covered transaction, the District did not verify that an entity was not suspended or debarred or otherwise excluded from participating in the transaction. iv. Questioned costs: Questioned costs, if any, are indeterminable v. Context: Of a population of 2 transactions, 1 transaction did not have documentation that the District verified that the vendor was not suspended or debarred or otherwise excluded from participating in a covered transaction. vi. Recommendation: The District should ensure that controls are implemented to ensure that the District completes a verification that an entity is not suspended or debarred or otherwise excluded prior to entering into a covered transaction b. Plan of acti on: The District changed its financial system to automatically notify staff that a suspension and debarment check is needed for all POs and contracts that are $25,000 and over, regardless of funding. c. Date of implementation: December 27, 2024

Wage rate requirements for contracts using 84.425 Education Stabilization Funds a. Type of deficiency: Material Weakness i. Condition: The District did not obtain copies of certified payroll and statements of compliance from contractors that worked on construction contracts in excess of $2,000 financed by federal assistance funds. A material weakness in controls over compliance with wage rate requirements was identified. ii. Cause: As the District does not typically fund construction projects with federal funds, the District’s staff were unaware of the requirement to obtain copies of certified payroll and statements of compliance from contractors that worked on construction contracts in excess of $2,000 financed by federal assistance funds. iii. Effect or potential effect : Without adequate internal controls over wage rate requirements and including the required provisions in construction contracts in excess of $2,000 financed by ESF funds, the District cannot demonstrate compliance with the wage rate requirements of the Davis-Bacon Act requirements iv. Questioned costs: Questioned costs, if any, are indeterminable. v. Context: Out of a population of 11 contracts, 4 contracts were selected to test wage rate requirements. The District did not obtain copies of certified payroll and statements of compliance for the 4 contracts selected. vi. Recommendation: The District should obtain an understanding of all compliance requirements and implement controls to ensure compliance with federal wage rate requirements. b. District staff representatives from Facilities, Business Services, and Grant Accounting will participate in at least one Oregon Bureau of Labor and Industry (BOLI) seminar titled Prevailing Wage Rate Laws for Public Agencies in Spring 2025. The Grant Manager will be directed to provide prevailing wage training specific for federal grants to Facilities and Grant Accounting staff . c. Date of scheduled BOLI seminars: February 6, 2025, March 19, 2025, and April 29, 2025. Additional training to be done by June 30, 2025.

November 15, 2022 Oregon Secretary of state, Audits Division 255 Capito! St. NE, Suite #500 Salem, OR 97310 Plan of Action for Multnomah Education Service District The Multnomah Education Service District 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 Talbot, Korvola and Warwick, and reported the deficiency listed below. The plan of action was adopted by the governing body at their meeting on November 15, 2022, as indicated by signatures below. Finding 2022.001: Significant deficiency Condition: The provisions for the prevailing wage rates requirements were not included in the construction contracts in excess of $2,000 financed by ESF funds and that the required certified payrolls were not obtained. The related deficiency in internal controls over compliance is considered to be a significant deficiency. As the District does not typically fund construction projects with federal fund, the District's staff were unaware of the $2,000 threshold for construction contacts financed by ESF funds to include prevailing wage rates requirements and used a threshold of $50,000, the Oregon Bureau of Labor & Industries' threshold for prevailing wage rate requirements for public works projects in Oregon. Cause: Effect or potential effect: Without adequate internal controls over wage rate requirements and Including the required provisions in construrtion contracts in excess of $2,000 financed by ESF funds, the District cannot demonstrate compliance with the wage rate requirements of the Davis-Bacon Act requirements. Questioned Costs: Questioned costs, if any, are indeterminable. Out of nine capital projects totaling $123,558, a sample of three capital projects was haphazardly selected. The capital projects were between $9,405 and $14,360 and totaled $26,024. Context; Recommendation: The District should obtain an understanding of all compliance requirements and implement controls to ensure compliance with federal wage rate requirements. Superintendent Dr. Faul Coakley Board of Directors Jessica Ariate ? Mary Botkin ? Kristin Corniielle < Katrina Doughty ? Dr. Samuel Henry ? Deny.se Peterson ? Helen Ying I !611 NE ??ns\?orth Circle ? Portland. Oregon 97220 ? (502) 255-18^1 ? MultnofiialiESD.org p!an ?? action: The Director oi Business & Operations is responsible for implementing the plan of action. All construction projects are managed by the MESD Facilities office. The Director instructed the MESD Contract and Risk Manager, meet with the Facilities office to inform staff of the Davis-Bacon prevailing wage requirements for construction contracts in excess of $ ? 2,00 . Facilities will include the consideration of Davis-Bacon requirements when reviewing a project request that is or has the potential of being federally funded. Facilities will implement the requirements of the Davis-Bacon Act as needed. Timeframe: The meeting took place on November 2, 2022. Facilities has updated their internal procedures. ? ' Multnora ESD Board Chair, Denyse Peterson Superintendent, Dr. Paul Coakley

Plan of Action for Multnomah Education Service District The Multnomah Education Service District respectfully submits the following corrective action plan in response to deficiencies reported in our audit of fiscal year June 30, 2021. The audit was completed by the independent auditing firm Talbot, Korvola and Warwick, and reported the deficiencies listed below. The plan of action was adopted by the governing body at their meeting on December 14, 2021. The deficiency is listed below, including the adopted plan of action and timeframe. Finding 2021-001 Material weakness: A material weakness in controls over financial reporting and compliance was identified while obtaining an understanding of the District's controls over financial reporting and performing audit procedures over significant account balances. The cause appears to be the lack of timely reconciliations and review of various account balances, including accounts receivable, accounts payable, and accrued payroll. There were two audit adjustments, one increasing accounts receivable by $828,594 and another increasing accounts payable by $521,412. Additionally, the lack of timely reconciliations and review of accounts balances has the potential to allow other material misstatements due to error or fraud. Auditor recommendation: The District should implement policies and procedures to ensure that reconciliation and review of account balances are performed in a timely manner. Plan of action and timeframe Starting January, 2022, the District Senior Accountant will provide a monthly report to the Director, Business & Operations, or designee, showing the status of reconciliation completions, approvals, and ongoing outstanding balances. Acknowledgements of receipt will be kept on file. Status reports will be provided to the Superintendent as requested.

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