BABOQUIVARI UNIFIED SCHOOL DISTRICT NO. 40

2025-001 Reporting

Federal Assistance Listing Number: 84.041 Program Title: Impact Aid Federal Agency: U.S. Department of Education Pass-Through Number: N/A Compliance Requirement: L. Reporting Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Questioned Costs: N/A

Repeat Finding: No.

Condition/Context: The District did not accurately support the student counts reported within it’s impact aid application for student enrollment.

Criteria: Section 7003 (OMB No. 1810-0687) Each year an LEA must submit this application, which provides the following information: counts of federally connected children in various categories, membership and average daily attendance data, and information on expenditures for children with disabilities.

Cause: The District did not have the adequate review procedures in place to ensure that student enrollment were accurately reported and verified.

Effect: The District was not in compliance with the reporting requirement. The application noted a student count of 1,055, and the support provided denoted a student count of 1,062.

Recommendation: We recommend the District review its internal control procedures over federal programs to ensure student enrollment data is maintained to support accurate reporting, and the data is reviewed and approved by someone other than the individual that is preparing the application.

Views of Responsible Officials: There is no disagreement with this finding.

2023 – 002 – Special Provisions

Federal Agency: U.S. Department of Education Federal Program Name: Impact Aid Assistance Listing Number: 84.041 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2022 – June 30, 2023 Statistically Valid Sample: No, and not intended to be a Statistically Valid Sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance

Criteria: Department of Labor (DOL) (40 USC 3141–3144, 3146, and 3147 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 wage rates) by the Department of Labor.

Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). This reporting is often done using Optional Form WH-347, which includes the required statement of compliance (OMB No. 1235-0008).

Condition/Context: For two out of three contracts sampled there was no prevailing wage clause noted to be followed in the contract agreements. Also, for the same two contracts sampled weekly certified payrolls were not collected and maintained for any relevant weeks during the fiscal year. Also, we did not note the superintendent’s signature on the contracts.

Questioned costs: None

Cause: Current process and controls are not at the correct precision level to ensure review of wage rate requirements are properly documented/processed to ensure compliances are being met.

Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant award.

Repeat finding: No

Recommendation: The District should refine its current process and associated controls surrounding the requirements in 29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction.

Views of responsible officials: There is no disagreement with the audit finding. See corrective action plan

2023 – 003 – Level of Effort

Federal Agency: U.S. Department of Education Federal Program Name: Impact Aid Assistance Listing Number: 84.041 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2022 – June 30, 2023 Statistically Valid Sample: No, and not intended to be a Statistically Valid Sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance

Criteria: (20 USC 7703(d)); 34 CFR Section 222.54; Title 34 Subtitle B Chapter II Part 222 Subpart D § 222.54. Section 7003(d) funds may not supplant any state funds (either general or special education state aid) that were or would have been available to the LEA for the free, appropriate public education of federally connected children with disabilities counted under Section 7003(d).

Condition/Context: The district appears to be supplanting Fund 001 funding with Impact Aid funds.

Questioned costs: None

Cause: Current process and controls are not at the correct precision level to monitor supplanting indicators to ensure compliances are being met.

Effect: Ineffective monitoring may result in questioned costs and noncompliance with the terms of the grant award.

Repeat finding: No

Recommendation: The District should refine its current process and associated controls to monitor supplanting of grant funds.

Views of responsible officials: There is no disagreement with the audit finding. See corrective action plan.

2023 – 004 – Equipment and Real Property Management

Federal Agency: U.S. Department of Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425 Pass-Through Agency: Arizona Department of Education Pass-Through Number(s): All Pass-Though Numbers Present in the SEFA Award Period: March 2020 through September 2024 Statistically Valid Sample: No, and not intended to be a Statistically Valid Sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance

Criteria: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of Subpart D – Property Standards including retaining audit evidence to support the physical inventory taken at the minimum of every two years. Additionally Per 2 CFR 200.303 (a) the District must establish and maintain effective internal control over the Federal ward that provides reasonable assurance that it is managing the federal award in compliance with federal status, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in the “internal Control integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Condition/Context: We were unable to obtain evidence of the physical inventory of property taken as required by the Uniform Guidance.

Questioned costs: None

Cause: Due to the change in management and timing of prior year finding, the District failed to perform the inventory within the fiscal year under audit.

Effect: Failure to retain adequate records can cause the District to be out of compliance with 2 CFR Part 200.

Repeat finding: Yes

Recommendation: We recommend the District to design controls to ensure a physical inventory of property be taken and the results reconciled with the property records at least every two years.

Views of responsible officials: There is no disagreement with the audit finding. See corrective action plan.

2023 – 005 – Allowable Costs/Cost Principles – Indirect Costs

Federal Agency: U.S. Department of Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425 Pass-Through Agency: Arizona Department of Education Pass-Through Number(s): All Pass-Though Numbers Present in the SEFA Award Period: March 2020 through September 2024 Statistically Valid Sample: No, and not intended to be a Statistically Valid Sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance

Criteria: In accordance with 2 CFR 200.334 Retention requirements for records, financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities.

Condition/Context: For one of the two samples selected the indirect cost was calculated incorrectly when compared to the supporting documentation.

Questioned costs: None greater than the reportable amount.

Cause: The District was not aware of the need to retain the original supporting documentation used for the indirect cost calculation.

Effect: Failure to comply with 2 CFR 200 can lead to improper payment charged to the program.

Repeat finding: No

Recommendation: We recommend management to incorporate a management review control to ensure the calculation is complete and accurate and all supporting documents including the general ledger used for the calculation is retained in accordance with UG.

Views of responsible officials: There is no disagreement with the audit finding. See corrective action plan.