Ray Unified School District No. 3

Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425U 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, Significant Deficiency Compliance Requirement: Reporting Criteria Education Stabilization Fund grant recipients are required to submit an annual performance report with data on expenditures, planned expenditures, subrecipients, and uses of funds. The District, as subrecipient  of  the  Arizona  Department  of  Education  (ADE),  fulfills  this  requirement  through  completion of ADE's LEA Uses of Elementary and Secondary School Emergency Relief I, II & III (ESSER Report).  In  accordance  with  2  CFR  200.303,  management  is  responsible  for  establishing  and  maintaining internal controls over federal programs. This includes the development of a system to ensure documentation is maintained to support all reported figures and counts as it relates to federal programs. Condition The District did not maintain adequate supporting documentation for the data included in the ESSER Report submitted to ADE. In addition, the report was not submitted timely. Cause The  District  did  not  have  adequate  review  procedures  in  place  to  ensure  the  ESSER  Report  was  sufficiently supported, and did not prioritize reporting deadlines. Effect The District was unable to support the data submitted on the ESSER Report and submitted the report after the deadline. Context The District did not maintain documentation to support the staff counts reported in the C ‐ LEA Hiring and  Retention  of  Specific  Positions  section  or  the  Full‐time  equivalent  (FTE)  positions  as  of   September 30, 2023. In addition, the District incorrectly reported that a portion of ESSER funds was allocated to schools. Lastly, the report was submitted two business days after the deadline. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should ensure that federal reports are submitted timely, are prepared accurately and that proper supporting documentation is maintained for all amounts indicated on such reports. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2024‐002 Repeat Finding: No Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425U 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: Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria Management is responsible for establishing and maintaining internal controls over payroll processing. This  includes  ensuring  adequate  separation  of  responsibilities  for  preparing  payroll,  authorizing  payroll, and distributing payroll. Further, 2 CFR Part 200.430(g) requires that documentation be prepared and retained that supports payroll costs charged to federal grants. Condition The  District  did  not  maintain  appropriate  documentation  demonstrating  approval  of  Education  Stabilization Fund stipends. Cause The District did not have a process in place to document payroll approvals for stipends. Effect The  District’s  internal  controls  related  to  payroll  were  not  adequate  to  ensure  unallowable  costs  would be prevented and/or detected. Context For 31 employees reviewed who received a stipend for the completion of a training program, and three employees reviewed who received a retention stipend, the District did not maintain Governing Board or management approval of the stipends. However, according to grant agreements on file, the stipends are allowable to the grant. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District must implement procedures over payroll to ensure adequate approval and maintenance of  documents.  Those  procedures  must  include  preparing  and  retaining  documentation  that  demonstrates costs charged to federal grants have been approved by the Governing Board and management. Views Of Responsible Officials See Corrective Action Plan.