oversight

Chicago Public School's use of Elementary and Secondary Education Act of 1965, as amended, Title I, Part A.

Published by the Department of Education, Office of Inspector General on 2002-03-29.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         UNITED STATES DEPARTMENT OF EDUCATION

                                             OFFICE OF INSPECTOR GENERAL


                                                    MAR 292002
Ms. Mary Jayne Broncato
Deputy Superintendent, School Support
Illinois State Board of Education
100 N. First Street
Springfield, IL 62777 -000 1

Dear Ms. Broncato:

This Final Audit Report (Control Number ED-OIG/A05-B0024) presents the results of
our audit of the Chicago Public School's (CPS) use of Elementary and Secondary
Education Act of 1965, as amended (the Act), Title I, Part A, (Title I) funds to purchase
property, equipment, and services from National School Services, Inc. (NSS) during the
period July 1, 1999, through June 30, 2000.

Statements that managerial practices need improvements, as well as other conclusions
and recommendations in this report, represent the opinions of the Office of Inspector
General (OIG). Determinations of corrective action to be taken will be made by the
appropriate U.S. Department of Education (Department) officials.

In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports issued by
the OIG are available, if requested, to members of the press and general public to the
extent information contained therein is not subject to exemptions in the Act.

                                             AUDIT RESULTS
During the audit period, CPS used $619,712 in Title I funds to purchase instructional
materials; supplies; professional services; seminars, fees, and memberships; repair and
maintenance services; and equipment from NSS. Our review of 106 randomly selected
accounting transactions totaling about $337,000 showed that CPS generally used the Title
I funds for Title I purposes. 1 However, CPS could strengthen controls to ensure it (1)
gets the best prices for property and equipment, and (2) approves only requests for
essential professional development.


1 As  defined by the Elementary and Secondary Education Act of 1965, as amended; 34
C.F.R. Parts 80 and 200; Office of Management and Budg~t Circular A-87, as amended;
and U.S. Department 'of Education, Office of Elementary and Secondary Education's
Policy Guidance for Title I, Part A: Improving Basic Programs Operated by Local
Educational Agencies applicable to the scope of this audit. Unless otherwise specified,
all regulatory citations are to the July 1999 volume.

                                  400 MARYLAND AVE.,       s.w. WASH~~~Tp~;D.C. 20202-1510
         Our mission is to ensure equal access to education and. tOPr6nitO'te j;1ducational excellence throughout the Nation.
                                                         Ms. Mary Jayne Broncato – Page 2 of 20




In response to the draft audit report, we received comments from the Illinois State Board
of Education (ISBE) and CPS. The ISBE and CPS generally concurred with the
recommendations from the draft audit report and informed us that they will or have taken
corrective actions. We made changes to the report based on the comments we received
(See Appendix A). Also as a result of those comments, we now are recommending (1)
the ISBE conduct an independent assessment of CPS Funded Programs’ procurement and
payment process (See Recommendation 1.1), and (2) restoration of $1,075 to the pool of
funds available for Title I services to private school students (See Recommendation 2.1).


Finding No. 1	 CPS Could Strengthen Controls to Ensure It Gets the Best Prices
               for Property and Equipment

During the period July 1, 1999, through June 30, 2000, CPS did not obtain the best prices
available for property and equipment used to provide Title I services to private school
students. We reviewed a judgmentally selected sample of invoices for property and
equipment CPS purchased for its Title I programs from NSS and compared those prices
with quotations for like items (covering the same period) we obtained from the
manufacturers. We limited our review to the invoices NSS submitted to CPS for
payment. We did not consider any invoices NSS may have received from its suppliers.
Based on this review, we concluded that CPS paid between 22 and 41 percent more than
it would have paid if it had purchased like items directly from the manufacturer.

Office of Management and Budget (OMB) Circular A-87, Attachment A (C)(2), defines
reasonable costs for state and local governments as any costs that do not exceed that
which would be incurred by a prudent person under circumstances prevailing at the time
the decision was made to incur the cost. Reasonableness of given costs can be
determined by, among other factors, the market prices for comparable goods and
services. According to 20 U.S.C. § 6321(a)(3), educational services and other benefits
for private school children shall be equitable to services and other benefits for public
school children participating in Title I programs.

The Chicago Board of Education requires its public schools to follow the Strategic
Sourcing Initiative. Instead of requiring the same purchasing procedures that public
school Title I programs must follow, CPS relied on the private schools to obtain price
quotations for property and equipment. Though a CPS central office employee2 had to
approve all purchases, CPS did not establish effective controls over purchases made for
the Title I programs for private school students. CPS did not require purchase orders and
NSS invoices showing sufficient detail so that CPS’ Funded Programs staff could
determine if other items and services were included in the price of computers. Without
such controls, less money was available to purchase equipment, property, and services for
private school students who were participating in the Title I programs. CPS also ran the
risk that it was not providing equitable services to the private school students. During the

2
    Funded Programs, Purchasing Department, or both.


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period July 1, 1999, through June 30, 2000, CPS purchased approximately $197,000 in
property and equipment from NSS. By establishing controls to ensure it obtained the best
prices, CPS would have been able to save between $43,000 and $81,000 during the audit
period. It could have used these savings to purchase additional property, equipment, and
services for other Title I programs for private school students.

When we brought this matter to her attention, CPS’ former Director of Funded Programs
informed us that her office was considering the following actions:

♦ 	 Consider pre-qualified vendors/consultants for needed services by the nonpublic
    schools for their federal programs;
♦ 	 For major purchases over $10,000, three price quotations will be requested for
    comparison;
♦ 	 For purchases over $10,000, request for quote or strategic sourcing vendor will be
    used;
♦ 	 Meet with CPS Department of Purchasing to discuss procedures to pre-qualify
    consultants providing professional services exceeding $5,000;
♦ 	 Utilize CPS strategic sourcing vendor for applicable requisitions with consideration
    on compatibility of the product to the needs of the private school; and
♦ 	 Use vendors with historically proven records with the public schools for related
    programs.

If enhanced (as described below) and effectively implemented, the policies CPS is
considering will reduce the risk of not obtaining the best prices from vendors. They also
would provide reasonable assurance that CPS has policies for purchasing property and
equipment for Title I programs for private school students that are equitable to those it
uses for its public school Title I programs.

Recommendations:

We recommend that the Assistant Secretary for Elementary and Secondary Education
direct the ISBE to:

1.1 	Conduct an independent assessment of CPS Funded Programs’ procurement and
     payment process. The purpose of the assessment should be to ensure Funded
     Programs’ process is sufficient for identifying billing irregularities and ensuring
     prices are reasonable; the assessment also should compare the procurement and
     payment process CPS Funded Programs uses for Title I programs for private school
     students with the Title I public school processes it uses, and, if possible, explain how
     the different processes are equitable;

1.2 	Require CPS to enhance its purchasing policies to ensure purchase orders and
     invoices include greater detail and specificity so Funded Programs staff can
     determine all property, equipment, and services included in the prices; and




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                                                        Ms. Mary Jayne Broncato – Page 4 of 20


1.3 	Monitor CPS to ensure it consistently follows written policies and procedures
     designed to improve its use of Title I funds to purchase property and equipment.

Auditee Comments

The ISBE received an explanation from CPS stating that the amount for the computers
purchased from NSS included services, such as installation, software, and delivery, in
addition to the cost of the computers. CPS informed the ISBE that it will require invoices
with greater detail and specificity to better identify items and services provided for the
Title I programs for private school students. The ISBE stated that it will review the
extent to which CPS consistently follows written policies and procedures for purchasing
property and equipment.

OIG Response

The purchase orders and invoices that we reviewed did not specify that NSS would
provide additional items or perform additional services. Further, the Title I program
designs we reviewed did not indicate that NSS would provide any services in addition to
the property and equipment. We made minor changes to this audit report based on the
ISBE’s and CPS’ comments. We also added a recommendation that the ISBE confirm
CPS’ assertions by conducting an independent assessment of Funded Programs’
procurement and payment process.


Finding No. 2	 CPS Could Improve Controls Over Approving Professional
               Development

For $1,075, NSS provided a training course on Microsoft ™ Excel and related materials
to teachers and school aides at one of the private schools we visited.3 Through a
discussion with the private school principal and a review of the purchase order and
invoice, we determined that the training neither assisted the private school teachers and
school aides in identifying at-risk students nor provided the teachers and aides with the
skills necessary to address participating students’ needs. Therefore, we do not consider
this course either reasonable or necessary. When we brought this issue to their attention,
CPS officials informed us that they discussed the training with NSS. NSS stated that the
training helped teachers and aides identify at-risk children. However, CPS officials told
us they did not accept NSS’ claim, and the purchase order and invoice we reviewed did
not contain sufficient information to support NSS’ claim.

Pursuant to Sections 1119(c)(1) and (2) of the Act, a local educational agency is required
to provide high-quality professional development that will improve the teaching of
academic subjects in order to enable children--in this case, private school children
receiving Title I services through CPS--to meet challenging performance standards. First
3
  As part of this audit, we visited six private schools and two public schools at which CPS
operated Title I programs. See the Audit Objective, Scope and Methodology section of
this report.


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                                                          Ms. Mary Jayne Broncato – Page 5 of 20


and foremost, professional development activities must support instructional practices
geared to challenging content standards. Also, Office of Management and Budget
Circular A-87, Attachment A (C)(1)(a), states that all costs charged to the program must
be "reasonable and necessary" for the purposes of the program.

CPS’ Funded Programs staff did not properly monitor requisitions submitted for
professional development. Additionally, CPS’ Funded Programs staff did not review
thoroughly invoices NSS submitted. The funds used to provide non-essential
professional development training to private school personnel could have been used to
train teachers and aides in areas that would have a direct influence on the teachers’
abilities to provide specialized instruction to the students needing Title I services.

Recommendations:

We recommend that the Assistant Secretary for Elementary and Secondary Education
direct the ISBE to:

2.1 Instruct CPS to restore, from non-federal sources, to the pool of funds available for
    providing Title I services to private school students, the $1,075 it paid for the training
    course and related materials. If CPS cannot restore and use the $1,075 for Title I
    services to private school students within time limitations described in 20 U.S.C. §
    1225(b) , ISBE should repay the $1,075 to the Department; and

2.2 Monitor CPS to ensure Funded Programs staff review all requisitions submitted for
    professional development and their related invoices carefully. Professional
    development activities must be evaluated by the Funded Programs staff to ensure the
    training will provide Title I teachers, aides, or accepted personnel with training that
    will directly benefit the children participating in the Title I programs.

Auditee Comments

CPS informed the ISBE that the training course was intended to help its Title I teachers
and aides and private school teachers in contact with Title I eligible private school
students record information and track students’ progress. CPS further stated that, even
though the course may not have directly addressed the needs of the students served, the
course was related to Title I data gathering requirements that must be done. CPS agreed
that it needed to review requests for professional development courses prior to delivery of
services and ensure the content coincides with the Title I guidelines. The ISBE stated
that it would review appropriate documentation to ensure CPS adherence to its
commitment to have Funded Programs personnel review and approve proposed
professional development activities prior to the delivery of services.

OIG Response

Based on the auditee’s comments, the course still appears to be non-essential and
contrary to the law. We made minor changes to the finding and revised the



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                                                          Ms. Mary Jayne Broncato – Page 6 of 20


recommendation to direct the ISBE to instruct CPS to restore the costs related to the
course.


                                 OTHER MATTERS
During the period July 1, 1999, through June 30, 2000, CPS' private schools Title I
teachers and aides completed purchase orders improperly. The teachers and aides did not
charge the appropriate budget categories for purchases made with Title I funds, and did
not follow written policies and procedures established by CPS’ Purchasing Department.
As a result, CPS was not in compliance with the standards for financial management
systems set forth in 34 C.F.R. § 80.20.

Pursuant to 34 C.F.R § 80.20(a), a State must expend and account for grant funds in
accordance with State laws and procedures for expending and accounting for its own
funds. The procedures of the State and its subgrantees must be sufficient to permit the
tracing of funds to a level of expenditure adequate to establish that such funds have not
been used in violation of applicable statutes.

During the audit period, when CPS teachers and aides requested items from different
budget classifications, they were to complete separate requisitions. If teachers and aides
submitted a requisition with a list of items from different budget classifications (or object
codes), CPS treated the items as if they were from the same object code. CPS’ Program
Cost Control system would not allow the costs from one invoice (or requisition) to be
separated into different object codes. In such situations, CPS included the whole amount
under one budget classification. CPS’ new computer system should allow CPS to
separate costs from the requisitions and invoices submitted and allocate the expenditures
to the appropriate budget classification categories.

We suggest that CPS ensure that its new computer system allows it to classify all
purchases in such a way that Funded Programs can easily trace expenditures to a level of
detail sufficient to ensure compliance with applicable statutes. CPS could also consider
ensuring its Title I teachers and aides follow written policies and procedures. Finally, the
ISBE could consider reviewing CPS’ new system to ensure it is in line with the State’s
laws and procedures for expending and accounting for State funds and confirming that
CPS is ensuring its Title I teachers and aides follow written policies and procedures.

Auditee Comments

CPS reiterated its assertion that its new system will resolve the budget classification
problems and allow for easy comparison of actual with budgeted expenditures. CPS also
said it provided training for its Title I teachers and aides to make them aware of their
responsibilities.




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                                                         Ms. Mary Jayne Broncato – Page 7 of 20


OIG Response

Based on our understanding of CPS’ new financial management system, CPS’ actions
should be adequate. Its new system should permit the tracing of funds to a level of detail
sufficient to determine compliance with Title I law. We suggest the ISBE review CPS’
new system to ensure it complies with the State’s laws and procedures and confirm that
CPS ensures its Title I teachers and aides follow written policies and procedures.


                                   BACKGROUND
Title I, Part A, of the Elementary and Secondary Education Act of 1965, as amended,
provides funds for supplemental educational services for eligible public and private
school students living in high-poverty areas. The Title I program provides formula grants
through state educational agencies to local educational agencies to assist low-achieving
children meet the State’s curriculum and student performance standards in core academic
subjects.

Local educational agencies are to target funds to schools with the highest percentages of
children from low-income families. Title I services target children who are failing, or at
most risk of failing, to meet State academic standards.

Services that are to be provided to private school children under the program include, but
are not limited to (1) instruction and services provided in the private school, other public
and privately owned sites, or in mobile vans or portable units; (2) educational radio and
television; (3) computer-assisted instruction; (4) extended-day services; (5) home
tutoring; (6) take-home computers; and (7) interactive technology.

A local educational agency may provide Title I services directly or through contracts with
public and private agencies, organizations, and institutions, as long as those entities are
independent of the private school and any religious organization providing those services.

CPS, in coordination with private school representatives, developed a yearly program
design for each Title I program for private school students. CPS’ Funded Programs staff
evaluated and approved each program design. Each private school, in coordination with
the CPS Title I teacher or aide, had the freedom to choose a vendor to provide property,
equipment, or services to the Title I program only if that vendor had been pre-approved
by the Chicago Board of Education. NSS, a licensed corporation in Illinois, had been
approved to conduct business with the Chicago Board of Education. During the period
July 1, 1999, through June 30, 2000, CPS used $619,712 in Title I funds to purchase
instructional materials; supplies; professional services; seminars, fees, and memberships;
repair and maintenance services; and equipment from NSS.




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                                                         Ms. Mary Jayne Broncato – Page 8 of 20


          AUDIT OBJECTIVE, SCOPE AND METHODOLOGY
The objective of our audit was to determine if CPS properly used Title I funds to
purchase property, equipment, and services from NSS during the period July 1, 1999,
through June 30, 2000. To achieve our objective, we interviewed Funded Programs,
Purchasing Department, and Accounting Department personnel. We also reviewed CPS’
written policies and procedures covering property maintenance and purchasing,
accounting transactions recorded during the audit period, purchase orders and invoices
(submitted by NSS) for property and equipment CPS purchased from NSS, and program
designs for public and private schools. We reviewed support4 for 106 randomly selected
accounting transactions (totaling about $337,000) from a universe of 304 transactions
(totaling about $650,000) recorded during the audit period. We also contacted three
manufacturers and obtained price quotations on property and equipment like that CPS
purchased from NSS during the period July 1, 1999, through June 30, 2000. Finally, we
visited two public and six private schools where we interviewed the Title I staff and
conducted an inventory of the Title I equipment.

To achieve our audit objectives, we relied in part on computer-processed data contained
in CPS’ computerized accounting system (Program Cost Control system). We assessed
the reliability of this data by comparing a sample of accounting transactions with source
documents (purchase orders and invoices NSS submitted to CPS). Based on these
comparisons, we concluded that the computer-processed data were sufficiently reliable to
be used in meeting the audit’s objectives.

We conducted our field work at CPS’ administrative offices located at 125 S. Clark
Street, Chicago, Illinois, selected public and private schools, and our regional office in
Chicago from April 12, 2001, through August 3, 2001. We discussed the results of our
audit with CPS officials on August 3, 2001. We conducted the audit in accordance with
government auditing standards appropriate to the audit’s scope.


             STATEMENT ON MANAGEMENT CONTROLS
As part of this audit, we did not assess the adequacy of CPS’ system of management
controls applicable to its administration to the Title I programs as a whole, because it was
not necessary to achieve our audit objective. Instead, we limited our assessment to CPS’
management controls over accounting for Title I funds used to purchase property,
equipment, and services. Because of inherent limitations, an assessment made for the
limited purpose described would not necessarily disclose all material weaknesses in
management’s controls. However, our assessment disclosed weaknesses in CPS’
management controls over purchasing and accounting for purchases that adversely
affected CPS’ ability to administer Title I funds. These weaknesses and their effects are
discussed in the Audit Results and Other Matters sections of this report.

4
 We limited our review to the invoices NSS submitted to CPS for payment. We did not
consider any invoices NSS may have received from its suppliers.


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                                                      Ms. Mary Jayne Broncato - Paie 9 of20



                       ADMINIStRATIVE MATTERS
This report mcorporates the comments you provided in response to the draft audit report.
If you have any additional comments or infonnation that you believe may have a bearing
on the resolution of this audit, you should send them directly to the following U.S.
Department ofEducation official, who will consider them before taking final
Departmental action on the audit.                                  .



                      Susan B. Neuman, Ed.D.
                      Assistant Secretary for
                      Elementary and Secondary Education
                      U.S. Department of Education
                      FB6-3W315
                      400 Maryland Avenue, SW
                      Washington, DC 20202


OMB Circular A-SO directs federal agencies to, expedite the resolution ofaudits by
initiating timely action on the findings and recommendations contained therein.
Therefore, receipt of your comments within 30 days would be greatly appreciated.




                                            Assistant Inspector General for Audit




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                                                                    Ms. Mary Jayne Broncato – Page 10 of 20

                                                                                                  APPENDIX A




                  Illinois State Board of Education                                               _    .Iobe.,*,
                  Ro .... 11I J . GklwlU                                                       f:mnt II. W .. h
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                                                                                     _ CIIIe/ E.~ 0IIit$




                                                          January 11 , 2002



       Mr. Richard Dowd
       Regional Inspector General for Audit.Region V
       Department of EduC<ltion
       Office of Inspector General
       111 N . Canal, Suite 940
       Chicago, ll60606-7204

       Dear Mr. Dowd:

       T his letter constitutes the response from the Illinois State Board of Education (ISSE) to
       Draft Audit Report (Control Number EO·OIG/AOS-SOO24) as prepared and submitted by
       the United States Department of Education (USDE), Office of Inspector General (OIG).
       That Draft Audit Report presents the results of an audit of the Chicago Public Schools'
       (CPS) use of Elementary and Secondary Education Act of 1965, as amended (the Act).
       Title I, Part A , (Tine I) funds to purchase property, equipment. and services from
       National School Services (NSS) during the period July 1, 1999, through June 30, 2000.

       Finding No, 1              CPS Could Strength en Controls to Ens ure It Gets The Best
                                  Prices for Property and Equipme nt.

       OIG Racommendatlon :

              The Assistant Secretary for Elementary and Secondary EducatIOn needs 10 direct
              the Illinois Siale Board of Education to monitor CPS to ensure it consistently
              follows written policieS and procedures designed to improve its use of Title I
              funds to purchase property and equipment.

       ISBE Response:

              The OIG Draft Audit Report contained the statement that ' CPS did not obtain the
              best pnces available for property and equipment used In prtvale schools." In
              response thereto, CPS explained that the invoices for computers purchased from
              NSS represented items and services such as delivery, Installation, and software
              which would not ordinarily be incorpora ted into a computer purchase price,
              According 10 CPS, those invoices were shown as a package and, consequently,




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                                                                 Ms. Mary Jayne Broncato – Page 11 of 20

                                                                                            APPENDIX A




            the price appeared 10 be excessive for the equipment purchased for use in
            programs for Title I eligible nonpublic school students. CPS submitted letters
            (see Attachments A and B) from NSS which addressed the NSS pricing
            structure.

            In order to avoid the likelihood of another situation of this nature, CPS will require
            that invoices be prepared with greater detail and specifICity to better identify
            items and services and to facilitate the determination of the appropriateness of
            pricing. CPS will also, barring the necessity to accommodate some unique or
            particular needs, use strategic SOUrcing vendors for the acquisition of property
            and equipment necessary for the implementation of programs of service for Title I
            eligibte students enrolled in private schools. CPS has also indicated its intention
            to:

                •   Use vendors with historically proven records with the public schools for
                    related services.
                •   Consider prequalifted vendors/consultants for needed services for federal
                    programs for nonpublic school students.
                •   Request three price quotations for major purchases over $10,000.

             The ISSE recognizes the importance of effective and efficient use of the Title I
             resources which are intended to provide support and assistance to our most
             needy and most at·risk students. ISSE also recognizes the importance of having
             in place and conSistently employing procedures and policies which ensure the
             reasonableness of costs and which ensure the clarity and aCOJrscy of documents
             and data intended to convey the manner in which Title I funds are utilized. As
             part of its exact monitoring procedures, ISSE wil1 review the extent to which CPS
             consistently fotlows the written policies and procedures which are designed to
             improve the manner in which Title I funds are used to purchase property and
             equipment. ISBE will also re inforce the importan ce of adherence to such policies
             and procedures through consultation and written communication.

       Finding No. 2       CPS Could Improve Controls Over Approving Professional
                           Developme nt.

       OIG Recommendatio n :

             The Assistant Secretary of Elementary and Secondary Education needs to direct
             the illinois State Board of Education to monitor CPS to ensure funded programs
             staff review all requisitions submitted for professional development and their
             related Invoices carefully. Professional development activities must be evaluated
             by the funded programs staff to ensure the training will provide Title I teachers,
             aides. or accepted personnel with training that will directly benefit the children
             participating in the Title I programs.




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                                                                 Ms. Mary Jayne Broncato – Page 12 of 20

                                                                                            APPENDIX A




       ISBE Response:

            The OIG found that a Microsoft Excel training course provided by NSS did not
            assist private school teachers and aides In identifying at·risk students, nor did It
            provide private schoolteachers and aides with skills required to address the
            needs of Tille I participating private school students.

            The OIG also found that CPS did not property monitor requisitions submitted for
            profeSSional development, flO( did CPS properly review invoices submitted by
            NSS.

            In response to OIG findings, CPS explained that the Microsoft Excel training
            course provided by NSS was a recommended strategy to better prepare teachers
            and aides for recording information and tracking student progress. CPS has
            asserted its intention to henceforth review and approve projXIsed professional
            development activities prior to the delivery of services In order to ensure that
            proposed activities wilJ train teachers and aides in areas that have a direct
            influence on the ability of those personnel to better serve Title I participating
            private school students.

            With regard to the OIG's concerns relative to the monitoring of requisitions for
            professional development and the review of Invoices submitted by NSS, CPS
            asserts that its new ORACLE system now provides better monitoring and review
            of invoices and requisitions. CPS also asserls that its ORACLE system requires
            that the CPS nonpublic schools manager andlor staff working with its services for
            Title I participating noopubllc schools students acknowledge receipts on tine
            (POD UP) prior to any payment for goods and services.

            ISSE recognizes the imjXIrtance of each local education agency designing
            professional development programs which will enable all eligible staff to
            participate In professional development activities which result in the delivery of
            services which better address the needs of Title I participating students. As part
            of its monitoring process, ISeE will review appropriate docvmentation to ensure
            CPS adherence to its commitment to have funded programs personnel review
            and approve projXIsed professional development activities prior to the delivery of
            services. IseE will also monitor to ensure that CPS' new ORACLE system does
            satisfy the need for better monitoring and review of requisitions and invoices
            submitted for professional development activities.




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                                                               Ms. Mary Jayne Broncato – Page 13 of 20

                                                                                        APPENDIX A




                                        OTHER MATTERS

       The DIG found that the CPS teachers and aides serving Title I eligible students in
       private schools completed purchase orders improperly as they did not charge
       appropriate budget categories for purchases made with Title I funds. The DIG also
       found that those teachers and aides did not follow written policies and procedures
       established by CPS purchasing department. The DIG noted that, when requisitions
       were submitted with items from different budget classifications, Ihe Program Cost
       Control System which CPS had in place at that time would not allow the costs from one
       Invoice or requisition to be separated into different object codes.

                                         ISBE Re sponse:

       CPS asserts that, with the new ORACLE system, the budget classification problem has
       been resolved. The new system does allow the costs from one Invoice or requisition to
       be separated into different object codes. The new system also allows for easy
       comparison of actual and budgeted expenditures by object code, and the system does
       not allow for the issuance of purchase orders if there Is InsuffICient funding .

       With regard to the DIG recommendation that there be additional training on CPS budget
       classifications, policies, and procedures, CPS asserts that a worlI.shop was conducted
       at the beginning of this school year to make Title I teachers and aides aware of their
       responsibilities as Title I personnel. CPS has also established a strategy to ensure
       compliance of its Title I personnel with polices and procedures through internal
       accountability processes conducted by funded programs staff persons.




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                                                   Ms. Mary Jayne Broncato - Page 14 of 20
                                                                         APPENDIX A



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FINAL AUDIT REPORT                                                 ED-OIG/A05-B0024 

                                                                        Ms. Mary Jayne Broncato - Page 15 of 20
                                                                                                  APPENDIX A



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FINAL AUDIT REPORT                                                                       ED-OIG/A05-B0024 

                                                                          Ms. Mary Jayne Broncato – Page 16 of 20

                                                                                                       APPENDIX A




      AUDIT REPORT-CONTROL NU MBER ED-OIGiA05-B0024
      NATIONAL SC HOOL SERVIC ES (NSS)
      J ULY I, 1999 THROUGH JUN E JO, 2000


      RES PO NS E:

      Flndlng No. I - CPS could stren gthen controls to t nsure II ittl th t belt prices ror
      property and equipment.

      The invoices for me computCJS purchased from NSS for the period July I, 1999 through June
      JO, 2001 for the nonpublic schools included services that would not normally be received in a
      tcgullll' computer purchase such as deli very, installation and software as indicated in the
      attached letter (see Attacrunent A). NSS also iostalled previously owned software on the new
      machines and setup the new equipment to be compatible with the programs being used for
      [ASA Title 1 in the nonpublic schools. Invoices were shown as a package, thus, the purchase
      price paid for the nonpublic schools appeared to be excessive. To resolve this sitwulon, we
      will require that invoices be more detailed to show other items/services being billed 10
      determine price reasonableness.We will also use CPS strategic sourcing vendors for nnnpublic
      school purchases unless the particullll' needs of the nonpublic schools would require special
      handling or a more reasonable pricing can be obtained from another source.



       FlDdlDC No. 2 - C PS could Improve controls over . pproviD& pro!estlonal development.

       The Microsoft Excel training course and related materials provided 10 the lab technicians and
       nonpublic school teachen in contact with lASA Title I eligible nonpublic school sruden.ts was
       recommended to reeord information and track students' progress (see Atw:hmtnt B). Also,
       the sWfhave to complete CPS required forms such u the poverty survey forms and eligibility
       crileria listing the academica!1y-at. rislr. students. Although this course may nol directly address
       the n«ds of the students served. the re Ill'e functions related to [ASA Title ['s dati gathering
       requirements thaI are to be done. However, in the future. we wi!1 require that professional
       development courses be approved prior to delivery of services to verify content in relation to
       IASA Title I guidelines.

       Regarding the recommendation of the department', review of invoices. the new ORACLE
       ,ystem provides us with better monitoring and review of invoices. Prior to:my payment,
       Department or Funded Program. penoanel hal to acknowledge receipu online (PODUP)
       of goods:md services for the nonpublic schools based on vendor's invoices and
       llCknowledgment ofepS nonpublic school Staff or the department's nonpublic schools
       manager.




FINAL AUDIT REPORT                                                                           ED-OIG/A05-B0024

                                                                        Ms. Mary Jayne Broncato – Page 17 of 20

                                                                                                     APPENDIX A




      A UDIT REPORT-CO"'TROL NUl'IIBER ED·OI GlA05-B0024
      NATIONAL SCHOOL S ERVICES (NSS)
      J ULY I, 1999 THRO UG H JUNE 30, 2000



       OTHERM ATIERS-

       DUring th e period July I, 1999 through June 30, 2000, CPS' private scbools Title I
       ttlch en and akies completed purch as e ord en Improperly_ Tb e teuben aud a kiu did
       not charge th e appropriate budget categories for purchaJts mad e with Title I funds. and
       did not ro uow written polici~ and procedures esta blis hed by C PS' Purchislng
       Department,

       Since April 2000, the Department of Funded Programs' staff online the request for goods and
       services for the nonpublic schools 10 set up the purchase orders for the vendors. The requests
       are reviewed for CPS vendor number, description ofi temslserviees, accuracy in expenditure
       codiDJ and available funds. Purchase orders will nOI be issued if there is insufficient funding.

       With regards to improper budget categories, CPS Oepanment ofPwcluuio8 c:m detect
       improper coding of expenditures and would oonnally cancel incorrectly coded purchase orders.
       However, there were some confusion with regards to software. When softwares are purchased
       with the initial purchase of computers, they are treated as pan: oflbe package and thus, coded
       as equipment. Otherwise, they art coded 5310 or 5320 due to lack ofl specific object code
       which is corrected in FY 200] with a sep&fate object code nil. As indicated in the audit
       report. the CPS legacy systern would not allow the COSIS from one invoice or requiSition to be
       separated into different object codes. Under the new ORACLE system, this problem 1w been
       resolved.

       As far as o-aining C PS title ( nonpublic schools' staff 10 ensure they follow written policies
       and procedures, a workshop was held at the beginning of the school year 2002 to make them
       aware of their responsibilities as Title I ptnoMel and the corresponding program. guidelines.




FINAL AUDIT REPORT                                                                         ED-OIG/A05-B0024

                                                                    Ms. Mary Jayne Broncato - Page 18 of 20
                                                                                                         APPENDIX A

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FINAL AUDIT REPORT                                                                            ED-OIGI A05-B0024
                                             Ms. Mary Jayne Broncato - Page 19 of 20
                                                                          APPENDIX A



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FINAL AUDIT REPORT                                             ED-OIG/A05-B0024 

                                                                       Ms. Mary Jayne Broncato – Page 20 of 20

                                                                                                             APPENDIX A



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FINAL AUDIT REPORT                                                                           ED-OIG/A05-B0024