WILSON ELEMENTARY SCHOOL DISTRICT NO. 7

2025-004 TIME AND EFFORT REPORTING

Federal Assistance Listing Number: 84.010 Program: Title I Grants to Local Educational Agencies Federal Agency: U.S. Department of Education Pass-Through Agency: Arizona Department of Education Grantor Number: 25FT1TTI-511353-01A and 24FSSIG-411353-01A Questioned Costs: $-0- Compliance Requirement: B. Allowable Costs Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Repeat Finding: This is not a repeat finding.

Condition/Context: The District did not maintain adequate time and effort documentation to support the allocation of payroll expenditures charged to the Title I program. Specifically, for employees whose salaries and benefits were charged in full or in part to the program, the District did not prepare or retain documentation that accurately reflected the actual time worked on Title I activities. As a result, there was insufficient support to substantiate that payroll costs charged to the program were allowable and properly allocated.

Criteria: In accordance with 2 CFR §200.430 (Compensation—personal services), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls and must reasonably reflect the total activity for which the employee is compensated. For employees whose salaries are charged in whole or in part to a Federal program such as Title I, appropriate time and effort documentation (e.g., personnel activity reports or equivalent documentation) is required to support the allocation.

Cause: The deficiency appears to be due to inadequate internal controls over compliance, including a lack of formal policies and procedures and insufficient oversight to ensure compliance with federal time and effort reporting requirements.

Effect: Without proper time and effort documentation, the District cannot demonstrate that payroll expenditures charged to the Title I program are allowable, allocable, and properly supported in accordance with federal regulations. This increases the risk that unallowable or improperly allocated costs could be charged to the program and may result in questioned costs and potential repayment to the granting agency.

Recommendation: The District should strengthen its internal controls over payroll allocations charged to Federal programs by implementing procedures to ensure compliance with 2 CFR §200.430. This should include:  Developing and documenting formal time and effort policies and procedures;  Requiring employees charged to federal programs to complete appropriate time and effort documentation that reflects actual work performed;  Ensuring supervisory review and approval of time and effort records; and  Providing training to relevant personnel on Federal compliance requirements.

Views of Responsible Officials: There is no disagreement with this finding. See the corrective action plan.

2025-005 PROCUREMENT, SUSPENSION, AND DEBARMENT Federal Assistance Listing Number: 10.553, 10.555, and 10.559 Program: Child Nutrition Cluster Federal Agency: U.S. Department of Education Pass-Through Agency: Arizona Department of Education Grantor Number: ADE ED09-0001 Questioned Costs: $-0- Compliance Requirement: I. Procurement, Suspension, and Debarment Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Repeat Finding: This is not a repeat finding.

Condition/Context: During testing of procurement transactions within the Child Nutrition Cluster, we noted the following: The District did not obtain or retain written price quotations from an adequate number of qualified vendors for applicable purchases, as required under Uniform Guidanceprocurement standards. In addition, a vendor with cumulative purchases exceeding $25,000, the District did not perform or document procedures to verify that the vendor was not suspended or debarred.

Criteria: In accordance with Uniform Guidance (2 CFR §200.318–200.320), non-Federal entities are required to use documented procurement procedures that ensure full and open competition. For purchases exceeding the micro-purchase threshold and below the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources. Additionally, per 2 CFR §200.214 and §180.300, non-Federal entities must not contract with or make subawards to parties that are suspended or debarred. Verification must be performed and documented (e.g., through SAM.gov or equivalent) for covered transactions exceeding $25,000.

Cause: Management turnover and lack of internal controls over federal programs.

Effect: Failure to follow required procurement procedures increases the risk that goods and services are not obtained in a cost-effective manner and may result in noncompliance with federal regulations. Additionally, failure to verify suspension and debarment status exposes the District to the risk of contracting with ineligible vendors, which could result in questioned costs and potential repayment of federal funds.

Recommendation: We recommend the District strengthen its procurement policies and procedures to ensure compliance with Uniform Guidance requirements. Specifically, the District should: Implement procedures to obtain and retain written price or rate quotations from an adequate number of qualified vendors for applicable purchases, establish and document a formal process for verifying suspension and debarment status (e.g., SAM.gov) for all vendors with contracts or purchases exceeding $25,000, provide training to staff involved in procurement on federal requirements and implement a review and approval process to ensure procurement documentation is complete and compliant prior to payment.

Views of Responsible Officials: There is no disagreement with this finding. See the corrective action plan.

Findings and Questioned Costs Related to Federal Awards

Finding Number: 2024-001 Repeat Finding: Yes, 2023-001 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: Special Tests and Provisions Criteria 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 (DOL) (40 USC §§3141-3144, 3146, and 3147).

Condition It could not be determined whether laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds were paid equal to or in excess of the prevailing wage rate for the locality.

Cause The District was unaware prevailing wage requirements applied to their construction contract.

Effect The District did not comply with the special tests and provisions requirements of the grant.

Context For two of two construction contracts reviewed, the District did not require the contractor or subcontractor to submit the required certified payroll for each week that work was performed. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should review federal requirements over prevailing wages, develop policies and procedures, and ensure those developed policies and procedures are implemented.

Views of Responsible Officials See Corrective Action Plan.

Findings and Questioned Costs Related to Federal Awards Finding Number: 2024-002 Repeat Finding: Yes, 2023-002 Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Numbers: 84.425D; 84.425U Federal Agency: U.S. Department of Education Federal Award Numbers: S425D210038, S425U210038 Pass-Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles

Criteria Management is responsible for following internal controls over journal entries to allow management or employees in the normal course of performing their assigned functions to prevent or detect and correct misstatements on a timely basis. Condition The District did not have adequate controls over journal entries. Cause Due to turnover of personnel and staff vacancies, journal entry procedures were not always followed.

Effect The District did not comply with the activities allowed/unallowed and allowable cost/cost principles requirements of the grant.

Context For three of five journal entries reviewed, it could not be determined if the journal entry was approved by an authorized person other than the preparer. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should properly implement internal controls over journal entries. Views of Responsible Officials See Corrective Action Plan.

Findings and Questioned Costs Related to Federal Awards Finding Number: 2023001 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 PassThrough Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Special Tests and Provisions Criteria 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 (DOL) (40 USC §§31413144, 3146, and 3147). Condition It could not be determined whether laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds were paid equal to or in excess of the prevailing wage rate for the locality. Cause The District was not aware of all of the prevailing wage requirements applied to its construction contracts. Effect The District did not comply with the special tests and provisions requirements of the grant. Context For two of two construction contracts reviewed, the District did not require the contactor or subcontractor to submit the required certified payroll for each week work was performed. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should review federal requirements over prevailing wages, develop policies and procedures, and ensure those developed policies and procedures are implemented. 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: 84.425U 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: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria Management is responsible for following internal controls over journal entries to allow management or employees in the normal course of performing their assigned functions to prevent or detect and correct misstatements on a timely basis. Condition The District did not have adequate controls over journal entries. Cause Due to turnover of personnel and staff vacancies, journal entry procedures were not always followed. Effect The District did not comply with the activities allowed/unallowed and allowable cost/cost principles requirements of the grant. Context For one of five journal entries reviewed for compliance with grant requirements, supporting documentation was not retained. In addition, it was unable to be determined if the journal entry was approved by an authorized person. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should properly implement internal controls over journal entries. Views of Responsible Officials See Corrective Action Plan.