Alamosa School District RE-11J

Criteria: 2 CFR §200.303 requires that the grant recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control- Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In addition, the District is required to promptly disclose whenever, in connection with the Federal award, it has credible evidence of the commission of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code or violation of the False Claims Act. Condition: During the fiscal year ended June 30, 2025, District staff have identified fraud in the payroll related to the Food Service Program. The District identified that an employee was submitting additional timecards for payment by circumventing the District’s regular timecard internal controls and process. The employee falsified the timecard document and circumvented the manager approval process. This occurred approximately from November 2024 to November 2025 in the amount of $20,250. Based on our testing of 60 payroll transactions with no exceptions, the District’s internal controls were properly designed but were not effective in identifying the fraud in a timely manner. However, the District’s management was able to discover the fraud by identifying the risk and suspicion with the employee’s timecard and properly reported the fraud. In addition, the District’s Food Service Program is reimbursed based on eligible student count used in the food service program. Questioned Costs: The fraudulent transactions amounted to $20,250, which is below the $25,000 questioned cost threshold. Cause: The District’s internal controls over payroll were properly designed but not effective to identify the fraud in a timely manner. The District processed the falsified timecards with the fake manager approval. However, the District’s management and risk assessment identified the fraud months after the fraud has occurred. Effect: The internal controls over payroll caused the District to incur fraud of $20,250. The District was required to report the fraud to the grantor and the Colorado Department of Education. The District terminated the employee and implemented additional timecard and payroll internal controls in order to avoid similar situations in the future by reviewing any timecards that are submitted outside of the regular internal control process. ALAMOSA SCHOOL DISTRICT RE-11J SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended June 30, 2025 58 Repeat Finding: No. Recommendation: We recommend that the District implement additional internal controls over payroll and timecard processing and communicate with staff to properly review timecards for appropriate signatures and communicate with managers regarding timecards that are submitted outside of the regular internal control process. The District may have already implemented these processes in light of the fraud discovery. Corrective Action Plan: Reported on page 59.

Criteria: 2 CFR 200 §200.303 Internal Controls requires that the grant recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wages) by the Department of Labor. Condition: Based on our testing of the wage requirements for the ESSER program, we identified that the District did not comply with the wage rate requirements for the HVAC project in a timely manner. Cause: The District did not have proper internal controls established over wage rate compliance requirements in order to identify noncompliance in a timely manner. Effect: The lack of internal controls indicates that the District may have incurred potential noncompliance and questioned costs related to the federal awards. However, based on our testing, the District complied with the wage rate requirements but the internal controls over related compliance did not operate effectively. Repeat Finding: No. Recommendation: We recommend that the District establish internal controls over special compliance requirements and perform them in a timely manner, such as wage rage requirements, to avoid potential questioned costs and noncompliance.