LUKACHUKAI COMMUNITY SCHOOL

Finding Number: 2024‐001 Repeat Finding: Yes, 2023‐001 Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Indian School Equalization 15.042 A23AV00864 N/A Title I Grants to Local Educational Agencies 84.010 A23AV00864 N/A Federal Agency(ies): U.S. Department of the Interior; U.S. Department of Education Pass‐Through Agency: Bureau of Indian Education Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria School management is responsible for establishing and maintaining internal controls over travel reimbursements, credit card transactions, journal entries, and disbursements that are adequate to ensure that all financial activities are properly processed and recorded. Further, Indian tribes and tribal organizations, may without the approval of the BIA, expend funds provided under a selfdetermination contract for purposes identified in 25 USC 5325, to the extent that the expenditure of the funds is supportive of a contracted program (25 USC 5325). These guidelines require internal controls over expenditures of federal monies to ensure expenditures comply with federal regulations and guidelines. (25 CFR 39; 25 CFR 900). Condition The School did not follow its Board adopted policies regarding disbursements to ensure all financial activities were properly processed. Cause The School has not implemented sufficient controls over disbursement transactions. There has been turnover in various key positions. Effect The School was not in compliance with Board adopted policies for federal regulations and guidelines. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of disbursement transactions, we noted the following: • For one of 10 travel reimbursements reviewed, the School did not maintain supporting documents. • For four of 10 travel reimbursements reviewed, the School did not reimburse the expense using the correct rates established by GSA, resulting in a net overpayment of $152. Context • For one of 10 travel reimbursements reviewed, meals were reimbursed with no overnight stay or substantial sleep/rest, and the reimbursement was not reported as a taxable employee benefit. • For seven of 40 disbursements reviewed, no dated receiving report was retained; therefore, we were unable to determine if the School paid goods before they were received. Additionally, we were unable to agree the description and quantity to the purchase order. • For 12 of 40 disbursements reviewed, the School ordered and received goods/services before a purchase order was in place. • For two of 40 disbursements reviewed, the expenditures exceed the authorized purchase order amounts, resulting in total exceeded costs of $151. • For one of 40 disbursements reviewed, the goods were received after the payment was made to vendor. • The School does not have a signed credit card user agreements that acknowledges the receipt of the School credit card use policies and procedures. • For one of 15 credit card transactions reviewed, documentation to verify the receipt of the prepaid item was not maintained. • Credit card statements were not always paid timely, resulting in late fees of $2,086 and finance charges of $2,317. • For one cutoff transaction tested, it was determined that the expenditure should have been assessed as Construction‐in‐Process and tracked with the capital asset listing. The School did not track how much of the project had been completed at year‐end. • For one of 25 journal entries reviewed, the School did not maintain sufficient supporting documentation. • For one of five cutoff transactions reviewed, it was determined that the expenditure should have been paid in the current fiscal year instead of the subsequent fiscal year. • For one of five credit card purchases reviewed, there was no receipt retained. • For 15 of 25 journal entries reviewed, the journal entry was not approved by someone other than the preparer. • For one of 40 disbursements reviewed, the purchase requisition was dated after the purchase and no purchase order was provided. • The School did not properly close out 13 open purchase orders. Recommendation The School should improve and adhere to its Board adopted policies and federal regulations. The School should ensure multiple employees understand the policies and procedures, so they can continue if there is turnover. Views of Responsible Officials

Finding Number: 2024‐002 Repeat Finding: No Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Indian School Equalization 15.042 A23AV00864 N/A Title I Grants to Local Educational Agencies 84.010 A23AV00864 N/A Federal Agency(ies): U.S. Department of the Interior; U.S. Department of Education Pass‐Through Agency: Bureau of Indian Education Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Procurement Criteria The Board should have adopted policies in accordance with 2 CFR §200.320 that requires the collection of quotes for purchases of at least $10,000 but no more than $250,000, and formal bid procedures for purchases over $250,000. Condition The School did not follow federal guidelines for purchases exceeding the small purchases threshold. Cause The School has not implemented controls to perform the collection of quotes. There has been turnover in various key positions. Effect The School was not in compliance with the Board adopted policies and federal guidelines. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of procurement requirements, we noted that the School did not prepare and maintain documentation for at least three written quotes from qualified sources, two instances from the Indian School Equalization Program, and three instances from the Title I Grants to Local Educational Agencies program. Recommendation The School should adopt and adhere to federal regulations and implement procedures for performing procurement, and should train multiple employees on the procurement process. Views of Responsible Officials See Corrective Action Plan.

Repeat Finding: Yes, 2023‐002, 2022‐003 Program Name/Assistance Listing Title: Indian School Equalization Assistance Listing Number: 15.042 Federal Agency: U.S. Department of the Interior Federal Award Number: A23AV00864 Pass‐Through Agency: Bureau of Indian Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Special Tests and Provisions Criteria According to the Indian Child Protection and Family Violence Protection Act (25 USC §3201 et. Sec.), the School must conduct a character investigation of each individual who is employed or is being considered for employment in a position that involves regular contact with, or control over, Indian children. The investigation should be reinvestigated every five years. The Act further states that the School may employee individuals in those positions only if the individuals meet standards of character, no less stringent than those prescribed under subpart B – Minimum Standards of Character and Suitability for Employment (25 CFR part 63). Condition Timely background investigations were not retained for all employees. Cause School and federal policies were not always followed or controls were not in place to ensure timely character investigations are performed and all adequate documentation is maintained. There has been turnover in various key positions. Effect The School was not in compliance with the Indian Child Protection and Family Violence Prevention Act. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of the School’s character investigations, we noted the following: •For 14 of 40 background investigations reviewed, the reinvestigation was not conducted prior to the expiration of the preceding investigation. •For four of 40 background investigations reviewed, the investigation did not contain all supporting documentation. Recommendation The School should ensure adequate character investigations are performed in a timely manner and documentation is maintained to achieve full compliance with the School’s policies and the Indian Child Protection and Family Violence Prevention Act. Views of Responsible Officials See Corrective Action Plan.

Account reconciliations were not performed timely and/or did not agree to the general ledger when performed. Current policies and procedures do not provide for segregation of duties as the Business Manager is to post and reconcile transactions without any review process.

During our test work over special tests and provisions, we noted the oversight agency (Bureau of Indian Education) conducted an investigation and found the background checks were not performed properly.