Fountain Hills Unified School District No. 98

Findings and Questioned Costs Related to Federal Awards Finding Number: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425 Federal Agency: U.S. Department of Education Federal Award Number: S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria Districts must submit an application through the Arizona Department of Education’s (ADE) Grants Management Enterprise system for ADE to review and approve grant expenditures. Each time the District makes an update to the expenditures that will be funded by the grant, the District must file an amended application which must be approved by ADE. Condition The District did not update the ESSER III grant application in a timely manner. The last time the grant application was updated was May 4, 2022. Since that date, the District has made changes to the expenditures funded from the grant, but has not notified ADE of those changes. Cause The District has not developed nor implemented strong internal controls over grant reporting due to turnover in key finance positions. Effect The District is at risk for making unallowable expenditures. Context For eight of 10 disbursements paid using Education Stabilization Fund funding reviewed, the District did not include the expenditures on the grant application approved by the ADE. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should develop or implement strong internal controls over grant reporting to reduce the risk of making allowable expenditures. Views of Responsible Officials See Corrective Action Plan.

Findings and Questioned Costs Related to Federal Awards Finding Number: 2023‐002 Repeat Finding: No Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425 Federal Agency: U.S. Department of Education Federal Award Number: S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Reporting Criteria Districts that received Education Stabilization Fund funding were required by the Arizona Department of Education to complete the “LEA Uses of ESSER I, II, & III – Use of Funds Detail” report by April 21, 2023. The report is based on fiscal year 2021‐22 financial information and full‐time equivalency (FTE) information. Condition Inadequate internal controls existed over the Education Stabilization Fund reporting processes. Cause The District has not developed nor implemented strong internal controls over reporting due to turnover in key finance positions. Effect The District is at risk of reporting inaccurate information. Context The District was unable to provide supporting documentation for the allocation of expenditures to the four categories in the report. In addition, the FTE reported as of September 30, 2022, did not agree to supporting documentation. Lastly, total FY22 ESSER III expenditures reported did not agree to accounting records by $106,755. Recommendation The District should develop or implement strong internal controls over reporting to reduce the risk of reporting inaccurate information. Views of Responsible Officials See Corrective Action Plan.