How ready are you to deal with various audits under the increasingly stringent time constraints? Being proactive is the key to minimize the stress that accompanies an audit. The tips provided in this article will help you manage these audits.
By this time several local education agencies (“LEAs”) have received a notification letter from the Texas Education Agency (TEA) related to a federal grant monitoring review of the administration of the Elementary and Secondary School Emergency Relief (ESSER) program. Pursuant to Title 2 of the Code of Federal Regulations (CFR) 200.331 and 200.332, TEA as a pass-through entity is required to monitor the activities of LEAs that are considered subrecipients to ensure that federal grant awards are used for authorized purposes, in compliance with federal statutes, regulations, and terms and conditions of the subaward.
TEA will conduct fiscal monitoring reviews of ESSER I, ESSER II, and ESSER III grants each year of the period of availability based on their Annual Federal Fiscal Risk Assessment. Additionally, if LEAs utilize more than $750,000 of federal funds, a Single Audit is required to be performed by independent auditors. If ESSER programs are federal major programs, additional documents are requested for the compliance audit under the Uniform Guidance.
How ready are you to deal with various audits under the increasingly stringent time constraints? Audits can be both tedious and overwhelming and tend to become a sudden priority that pulls you away from your daily work routine. Being proactive is the key to minimize the stress that accompanies an audit. The tips below will help you achieve this:
- Employee trainings - The role in the audit for each employee should be communicated to the employees ahead of time through trainings.
- Documentation, record maintenance, and retention - Keeping electronic files and paper trail for all transactions and maintaining organized records are crucial for any audit. At a minimum, LEAs should maintain the following documentation as described in TEA’s ESSER Side-By-Side Guidance
- Policies and procedures at a minimum must address:
- Compliance with conflict of interest requirements
- Financial reporting and cash management
- Allowability costs
- Procurement
- Methods for conducting technical evaluations of proposals and selecting recipients
- Travel authorizations and travel reimbursements
- Detailed general ledgers and payroll journals compliant with Financial Accountability System Resource Guide (FASRG)
- Procurement records
- Personnel records
- Job descriptions
- Salary authorizations
- Payroll time and effort records (if applicable)
- Payroll journal
- Employee first and last names and identification numbers
- Gross salary and other income, deductions, and net earnings
- Pay period, check date, and check number
- Fund code to which the payroll costs were charged
- Records showing the itemized transactions that were reclassified to ESSER funds
- Needs assessment and/or planning documents
- Inventory records of equipment and technology purchased with grant funds
- Source documentation supporting expenditure of grant funds
- Drawdown requests and expenditure reports
- Outreach to private nonprofit schools (ESSER I only)
- Spreadsheet or other documents with relevant supporting documentation
- Chart of Accounts which lists all general ledger account codes including all locally defined codes
- Maintenance of Equity for ESSER III
- Use of funds plan requirements for ESSER III
- Safe return to in-person instruction and continuity of services plan for ESSER III
- Policies and procedures at a minimum must address:
- Federal and state regulations – LEAs should stay up-to-date with the US Department of Education (USDE) and TEA guidelines and communicate them to employees. The following links are very helpful resources:
- Written policies and procedures – Board policies, financial operations procedures, and a grants manual should be reviewed on a periodic basis to ensure that all the regulations and compliance updates are included.
- Internal Controls – LEAs must establish and maintain effective internal controls that provide reasonable assurance that they are managing the federal award in compliance with the federal statutes, state regulations, and the terms and conditions of the federal award. The Internal Control Questionnaires (ICQ) from the TEA correspondence includes:
- Written Procedures Required by the Uniform Guidance (2 CFR 200 or EDGAR)
- Control Activities which include approval, aggregate cost, contracts, cost and price analysis, contract monitoring maintenance of records, administering CARE Act funding, etc.
It is important for an LEA to promote a strong culture of compliance that starts with the tone at the top. Sharing compliance best practices as well as the implications and risks associated with non-compliance within the organization, result in having a smooth sailing audit.
Brace yourself. More ESSER audits are coming.
