oversight

Project ASCEND (After School and Community Enrichment for a New Direction).

Published by the Department of Education, Office of Inspector General on 2004-02-11.

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

                       UNITED STATES DEPARTMENT OF EDUCATION 

                                         OFFICE OF INSPECTOR GENERAL 

                                  1999 BRYAN STRBBT, HARWOOD CENTER, SUITE 2630 

                                             DALLAS, TEXAS 75201-6817 

                                       PHONB: (214) 880-3031 FAX: (214) 880-2492 





                                                   FEB I I 2004
Mr. Dennis Silas, Superintendent
Drew School District
286 West Park A venue
Drew, MS 38737-3347

Dear Mr. Silas:

This Final Audit Report (ED-OIG/A06-DOOI7) presents the results of our audit of the 21 st
Century Community Learning Centers (21 st Century) grant to Project ASCEND (After School
and Community Enrichment for a New Direction) for the peri~d June 1,2001, through March 31,
2003. Our objective was to determine whether Project ASCEND properly accounted for and
used 21 st Century grant funds in accordance with the Elementary and Secondary Education Act
of 1965 (ESEA), as amended by the Improving America's Schools Act of 1994; Education
Department General Administration Regulations (EDGAR); grant terms; and the cost principles
in Office of Management and Budget (OMB) Circular A-87.

We provided a draft of this report to Project ASCEND. In its response to our draft report,
Project ASCEND officials provided additional support and we reduced the amount of
unallowable costs to $100,291 and the unsupported costs to $147,386. We have summarized
Project ASCEND's comments in the body of the report and have included the response as
Attachment B.




Title X, Part I, of the ESEA, as amended, authorizes the 21 st Century program. The program
awards three-year grants that provide funds to rural and inner city schools or consortia of schools
to enable them to plan, implement, or expand projects that benefit the educational, health, social
service, cultural, and recreational needs of the community. The program, funded at nearly $846
million for fiscal year 2001, enables schools to stay open longer and set up community learning
centers.

A community learning center is an entity within a public elementary or secondary school
building that provides educational, recreational, health, and social service programs for residents
of all ages within a local community and a local educational agency operates the community




      Our mission is to promote the efficiency, effectiveness, and integrity ofthe Department's programs and operations
ED-OIG/A06-D0017                                                                       Page 2 of 6


learning center in conjunction with local governmental agencies, businesses, vocational
educational programs, institutions of higher education, community colleges, and cultural,
recreational, and other community and human service entities. The center must include no less
than 4 of the 13 activities listed in Title X, Part I, Section 10905 of the ESEA, as amended. The
local educational agency is encouraged to use the funds to accomplish activities that offer
significant expanded learning opportunities for children and the community members in a safe
and supervised environment before and after school. The programs may support health needs,
literacy education, children’s day care services, and telecommunications and technology
education for individuals of all ages.

The Department of Education awarded Project ASCEND a 21st Century grant totaling
$2,820,780. The award amounts, by budget period, were—

                          June 1, 2001 - May 31, 2002               $ 985,020
                          June 1, 2002 - May 31, 2003               $ 915,337
                          June 1, 2003 - May 31, 2004               $ 920,423
                          Total                                     $2,820,780

Project ASCEND includes seven sites in three school districts in two counties in Mississippi,
Sunflower County and Montgomery County. Drew School District has the fiduciary
responsibilities for the grant; however, each individual school district is responsible for
documenting and accounting for their own expenditures.

In its first two years of operation, Project ASCEND’s programs included after school, summer
school, General Educational Development (GED), adult computer class, art classes, and drug-
free and gang seminars.


                                     AUDIT RESULTS 



Project ASCEND did not properly account for and use 21st Century grant funds in accordance
with all applicable regulations, grant terms, and cost principles. Project ASCEND charged the
grant for unallowable costs ($100,291) and costs for which it did not maintain adequate support
($147,386). The unallowable amount consists of charges for payments to a contractor for
professional services that were contingent upon the school districts receiving the grant (the
scheduled payments to the contractor totaled $169,247 of which $100,291 was paid during the
first two years of the grant). The unsupported amount consists of charges for payroll ($126,669),
fringe benefits ($19,211), and general expenses ($1,506) for which Project ASCEND did not
provide adequate documentation that the costs were reasonable, allowable, and allocable.

OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments,
Attachment A, Paragraph C.1 (1997) provides that—
ED-OIG/A06-D0017 	                                                                     Page 3 of 6


    To be allowable under Federal awards, costs must . . . Be necessary and reasonable for
    proper and efficient performance and administration of Federal awards . . . Be allocable
    to Federal awards . . . Be adequately documented.

We concluded that this condition occurred because the three school districts did not establish a
formal system of management controls, policies, procedures, and practices to consistently
administer Project ASCEND’s 21st Century grant. The schools used informal procedures to
document “hand written” vendor transactions and did not develop a personnel distribution
system. Details of the unallowable and unsupported costs are discussed in Attachment A.


                                  RECOMMENDATIONS 



   We recommend that the Assistant Secretary for Elementary and Secondary Education
   instruct Project ASCEND to—

   1. 	 Refund to the Department of Education unallowable costs of $100,291;

   2. 	 Not claim $68,956 for unallowable costs for contracted professional services; and

   3. 	 Provide sufficient documentation to support $147,386 or refund that amount to the
        Department of Education.


           PROJECT ASCEND’S COMMENTS TO THE DRAFT REPORT 



Project ASCEND provided additional documentation to support the unsupported costs identified
in the draft report. Project ASCEND’s comments included comments from each of the school
districts in the consortium.

Drew School District provided activities logs for Project ASCEND’s director that were kept on
her computer monthly and submitted unsigned. The logs were subsequently signed and dated.
In addition, Drew submitted documentation for the following unsupported costs: mileage sheets
as support for the unsupported transportation costs of $5,516, hotel receipts and a travel
reimbursement request for unsupported travel costs of $1,908, a copy of a check from the
Director for a reimbursement that was “inadvertently” paid twice for unallowable travel costs of
$129, and various documentation to support the unsupported general expenses of $1,506.

Montgomery County School District did not provide any additional documentation but they did
state that they changed how they document time for employees working from different funding
sources.

Sunflower County School District did not provide any additional documentation but did provide
an affirmation “that the hours worked by the employees were correctly paid.”
ED-OIG/A06-D0017 	                                                                    Page 4 of 6


Regarding the unallowable contract cost of $100,291, Project ASCEND stated the grant writer
drew up his standard contract and that Project ASCEND officials were unaware that the contract
was illegal. Project ASCEND also stated that if they had known there was a problem with the
contract, they would not have signed it.


                                    OIG’S RESPONSE 



After reviewing Project ASCEND’s response, we reduced the amount of unsupported costs by
$7,424 and unallowable costs by $129. We accepted the following documentation as adequate
support: mileage sheets as support for the unsupported transportation costs of $5,516, hotel
receipts and travel reimbursement request for unsupported travel costs of $1,908, and a copy of a
check from the Director for a reimbursement that was “inadvertently” paid twice for unallowable
travel cost of $129. We made adjustments to the figures in this report.

With regards to the payroll and fringe benefits, we did not make any changes to our unsupported
costs or recommendations. All documentation and affirmations were made after our audit period
and fieldwork had ended, and these documents need to be evaluated by the Office of the Chief
Financial Officer. In addition, we did not make any changes to the unallowable contract costs.


                     OBJECTIVE, SCOPE, AND METHODOLOGY 



The objective of our audit was to determine whether Project ASCEND properly accounted for
and used 21st Century grant funds from June 1, 2001, through March 31, 2003, in accordance
with the ESEA, as amended; EDGAR; grant terms; and the cost principles in OMB Circular A-
87, effective August 29, 1997. We expanded our scope to include the unallowable contract costs
that were outside of our audit period.

To accomplish our objective, we—

   • 	 Reviewed the financial statement and OMB Circular A-133 audit report for the year
       ended June 30, 2002;
   • 	 Reviewed Project ASCEND’s 21st Century grant application and budget narrative;
   • 	 Reviewed Project ASCEND’s Grant Performance Reports;
   • 	 Reviewed Drew School District and Montgomery County Board Minutes for meetings
       from April 2001 through March 2003;
   • 	 Reviewed written policies and procedures for budgeting, accounting, procurement,
       payroll, and fringe benefits for the 21st Century grants;
   • 	 Judgmentally selected and reviewed 4 of 20 pay periods and all the associated payroll
       transactions. We selected months that were: (1) near the beginning or end of our audit
       period; (2) during the summer program; or (3) during winter break;
   • 	 Judgmentally selected and reviewed purchase orders, invoices, cancelled checks, receipts,
       and other supporting documents for 163 transactions from a universe of 563 transactions.
ED-OIG/A06-D0017                                                                        Page 5 of 6


       The reviewed transactions account for 69 percent of the total dollars expended to
       vendors. They were selected based on the type of service provided without regard to
       dollar value; and
   •   Interviewed various Project ASCEND employees, and Department of Education officials.

To achieve our audit objective, we relied, in part, on computer-processed data related to the 21st
Century program contained in Drew School District, Sunflower County School District, and
Montgomery County School District accounting systems. We verified the completeness of the
data by comparing source records to computer-generated data, and verified the authenticity by
comparing computer-generated data to source documents. Based on these tests, we concluded
that the data were sufficiently reliable to be used in meeting the audit’s objective.

We conducted our fieldwork at Project ASCEND’s three business office locations in the Drew,
Sunflower County, and Montgomery County School Districts between April 28, 2003, and May
29, 2003. We discussed the results of our audit with Project ASCEND officials at the three
locations on May 6, May 8, and May 29, 2003, respectively. An exit conference was held with
Project ASCEND officials on August 18, 2003.

Our audit was performed in accordance with generally accepted government auditing standards
appropriate to the scope of audit described above.


                    STATEMENT ON MANAGEMENT CONTROLS 



As part of our review, we relied on substantive testing of costs charged to the 21st Century grant
to test management controls. Our testing disclosed instances of non-compliance with federal
regulations, grant terms, and cost principles that led us to conclude that weaknesses existed in
Project ASCEND’s controls over the 21st Century grant. These weaknesses and their effects are
discussed in the AUDIT RESULTS section of this report.


                             ADMINISTRATIVE MATTERS 



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.
Determinations of corrective action to be taken will be made by the appropriate Department of
Education officials.
ED-OIG/A06-D0017                                                                        Page 6 of 6


If you have any additional comments or information that you believe may have a bearing on the
resolution of this audit, you should send them directly to the following Education Department
officials, who will consider them before taking final Departmental action on the audit:

                      Jack Martin
                      Chief Financial Officer
                      Office of the Chief Financial Officer
                      400 Maryland Avenue, SW, Room 4E313
                      Washington, DC 20202

                      Raymond Simon
                      Assistant Secretary for Elementary and Secondary Education
                      U.S. Department of Education
                      Federal Building No. 6, Room 3W315
                      400 Maryland Avenue, SW
                      Washington, DC 20202

It is the policy of the U.S. Department of Education to expedite the resolution of audits
by initiating timely action on the findings and recommendations contained therein.
Therefore, receipt of your comments within 30 days would be greatly appreciated.

In accordance with Freedom of Information Act (5U.S.C §552), reports issued by the Office of
Inspector General 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.

                                                     Sincerely,
                                                     /Signed/
                                                     Sherri L. Demmel
                                                     Regional Inspector General
                                                      for Audit
Attachments
                                                                             ATTACHMENT A




                          PROJECT ASCEND
             st
         21 CENTURY COMMUNITY LEARNING CENTER GRANT
        SCHEDULE OF UNSUPPORTED AND UNALLOWABLE COSTS
               JUNE 1, 2001, THROUGH MARCH 31, 2003

                  Cost Category     Unsupported       Notes      Unallowable        Notes
                                       Costs                       Costs
            Payroll                      126,669          (1)                 0
            Fringe Benefits               19,211          (2)                 0
            Transportation                     0                              0
            Travel/Meetings                    0                              0
            General Expenses               1,506          (3)                 0
            Contracts                          0                       *100,291         (4)

            Totals                        $147,386                     $100,291

* The contract for grant writing services was for $169,247. Project ASCEND paid $100,291
during the first two years of the grant.


Notes:
(1) 	    Represents payroll charges ($126,669) not supported by personnel activity reports or
         equivalent documentation that meet the required standards. OMB Circular A-87,
         Attachment B, Paragraph 11.h (4)(a) (1997) states, “Where employees work on multiple
         activities or cost objectives, a distribution of their salaries or wages will be supported by
         personnel activity reports or equivalent documentation which meets the standards in
         subsection (5)…. Such documentary support will be required where employees work on:
         (a) More than one Federal award.” In addition, OMB Circular A-87, Attachment B,
         Paragraph 11.h (5) (1997) states that, “Personnel activity reports or equivalent
         documentation must…account for the total activity for which each employee is
         compensated…and must be signed by the employee….” Therefore, these costs are
         questioned.

(2) 	    Represents the fringe benefits ($19,211) related to the salaries not supported by personnel
         activity reports or equivalent documentation that meet the required standards. OMB
         Circular A-87, Attachment B, Paragraph 11.d (5) (1997) states, “[Fringe] benefits . . .
         shall be allocated to Federal awards . . . in a manner consistent with the pattern of
         benefits attributable to the individuals or group(s) of employees whose salaries and wages
         are chargeable . . . ” Because the salary of these employees are questioned, the related
         fringe benefits are questioned.
                                                                         ATTACHMENT A


(3)     R
        	 epresents general expenses from “hand written” check transactions ($1,506) that Project
        ASCEND could not substantiate. According to OMB Circular A-87, Attachment A,
        Paragraph C, Subparagraph 1.j. (1997), to be allowable, costs must be adequately
        documented.

(4) 	   Represents the contractual expenditures for grant writing services ($100,291). OMB
        Circular A-87, Attachment B, Paragraph C, Subparagraph 33 (a) (1997) states, “Cost of
        professional and consultant services rendered by persons or organizations that are
        members of a particular profession or possess a special skill, whether or not officers or
        employees of the governmental unit, are allowable, subject to section 14 when reasonable
        in relation to the services rendered and when not contingent upon recovery of the costs
        from the Federal Government.” The contract between the grant writer and Project
        ASCEND called for payment of six percent of the total grant or $169,247. Because
        payment was contingent upon Project ASCEND receiving the grant, the contract
        payments are not allowed. Project ASCEND has paid $100,291 of the contracted
        amount.
                                        Drew'School District                                ATTACHMENT B
                                               OFFICE OF SUPERINTENDENT                            BOARD OF TRUSTEES
SUPERINTENDENT                                                                                       John Q. West, President
  James C. Edwards                             286 WEST PARK AVENUE                                       Sheryl Nelson
   662·745·6657                                                                                            JimHl\I'IlIon
   662·745·6658                            Drew, Mississippi 38737                                     Stanley L•. Robinson 

 FAX: 662·745·6630                                                                                          Tom Davis 





        November 21,2003



        Sherri L. Demmel
        Regional Inspector General for Audit
        U. S. Department of Education
        Office of Inspector General
        1999 Bryan Street, Suite 2630
        Dallas, TX 75201-6817

        Dear Ms. Demmel:

        We have received a copy of the Draft Audit Report of the findings of the audit conducted by the U.
        S. Department of Education, Office of the Inspector General of the 21 st Century Community
        Learning Centers (21 st Century) Grant to Project ASCEND (After School and Community
        Enrichment for a New Direction) for the period June 1,2001 through March 31,2003. The findings
        had some costs that were classified as unsupported and unallowed. The District would like to
        address these issues.

        We had attempted to contact the auditor who conducted the audit since the receipt of the draft to
        obtain clarification on some pOints and had been unsuccessful until yesterday. She had been in
        the field conducting audits. She has provided insight as to the breakdown of the questioned costs.
        After speaking with the auditor, we realize that some of the unsupported costs are costs incurred
        by Sunflower County and Montgomery County S,chooi Districts. Therefore, we are requesting a
        two week extension to allow the other districts time to address their issues. Their offices will be
        closed the week of Thanksgiving.

        We are providing the following documents to support the questioned costs:

        Personnel w/Fringe Benefits:
              $145,880               Edit    had kept activity logs on her computer monthly and
                            submitted them unsigned. Subsequently,      Edit has signed the logs
                            and dated them today.   Edit      FY02 salary was $42,215 and her FY03
                            salary was $52,036.

        Transportation:
              $5,516 	         Enclosed are copies of mileage sheets for the time period submitted to the .
                               Drew School District Business Office by the Transportation Supervisor. One
                               month's form is not titled correctly, but the data contained on the form is the
                               correct data. A letter from the Transportation Supervisor certifying this is
                               enclosed. The reimbursement rate is $2.00 per mile. (659+747+687+665
                                    =
                               x $2 $5516)
                                                                                 ATTACHMENT B

Travel:
          $1908     $1814.85 - Orlando Marriot: Enclosed are copies of the receipts from the
                    hotel, and the receipt for the refund from the transaction. There were three
                    rooms. The total of the rooms was $1,088.91. Each room was $362.97.

                    $93.60 -      Edit     Copy of check #3078 for $425.16 with copies of
                    travel reimbursement requests and invoices.

          $129            Edit        was inadvertently reimbursed twice for the same travel
                    request. She has subsequently refunded the $129. A copy of her check
                    and the receipt for the check are enclosed.

General Expenses:
      $1,506        $232.00 - Pizza Hut: Handwritten recgipt from Pizza Hut manager with
                    store's stamp. Local Pizza Hut does not have stationery.

                    $79.60 - Burger King: Chec~#536g­
                    $79.60 - Burger King: Check # 3370,
                    Invoice #110713 from Noble Food Service, Inc., the owner of the local
                    Burger King restaurant.

Contracts:
       $100,291     The contract in question is with       Edit          Edit      came highly
                    recommended as a grant writer and has an excellent reputation. He drew
                    up his standard contract a~d;.we were unaware that this contract was illegal.
                    Had we any idea that there was a problem with the contract, we would have
                    never signed it.




~~
Dennis Silas
                                                  

Superintendent
                                                                                          ATTACHMENT B
                                       Drew School District
                                                OFFICE OF SUPERINTENDENT                        BOARD OF TRUSTEES
SUPERINTENDENT                                                                                    John Q. West, President
   Dennis Silas                                 2$6 WEST PARK AVENUE                                   Sheryl Nelson
   662·745·6657                                                                                         Jim Hannon
   662·745·6658                             Drew, Mississippi 38737                                 Stanley L. Robinson 

 FAX: 662·74'-6630                                                                                       Tom Davis 




       December 15, 2003



       Sherri L. Demmel 

       Regional Inspector General for Audit 

       U. S. Department of Education 

       Office of Inspector General 

       1999 Bryan Street, Suite 2630 

       Dallas, TX 75201-6817 


       Dear Ms. Demmel:

       Thank you for granting us the two-week extension to address some issues found in the audit
       conducted by the U. S. Department of Education, Office of the Inspector General of the 21 st
       Century Community Learning Centers (21 st Century) Grant to Project ASCEND (After School and
       Community Enrichment for a New Direction) for the period June 1, 2001 through March 31, 2003.
       We are providing the following documents to support the questioned costs:

       Personnel w/Fringe Benefits:
             Enclosed are letters from the superintendents from Sunflower County Schools and
             Montgomery County Schools.

       General Expenses: 

             $232.00 - Pizza Hut: Handwritten receipt from Pizza Hut Manager, 
        Edit         , with
             store's stamp. Local Pizza Hut does not have stationery.

                 $79.60 - Burger King: Check #3369
                 $79.60 - Burger King: Check # 3370
                 Invoice #110713 from Noble Food Service, Inc., the owner of the local Burger King
                 restaurant.

                 $184.24 - The payee for this check was actually Western Sizzlin. The PO was mistakenly
                 coded as Inverness Elementary School. Enclosed is a copy of the check to Western
                 Sizzlin, a copy of the PO, and the receipt from Western Sizzlin.

                 $535.37 - SuperValu: Enclosed is a copy of the PO and copies of receipts from SuperValu.


    0  .. incerely,
       S                       /J


 ~AJav
 ~ennis Silas
       Superintendent
12/15/03     13:51   FAX 662834584                  MONT CO SCHOOLS                                          141 001

                                                                                            ATTACHMENT B
           Carolyn      Swanson-----_______
                              SUPERINTENDENT pF EDUCATION, MONTGOMERY COUNTY
                                                                                             P.o. Box 687
                                                                             WINONA, MISSISSIPPI3S9S7
                                                                                 Telephone: 6El2-283-.4S33
                                                                                       FAX: 15152.283-4584



       December 15. 2003


       To:             Devoyce Morris

       From:           Carolyn Swanson

       Re:             21!ll Century

                          ,
       Based on the email from       Edit       on December 15, 2003, Montgomery County
       School District has provided the information below to resolve the working time issue
       concernmg:
             Edit      - November 2001 tbru March 2003 

             Edit    - June and December 2002, March 2003 

             Edit         - June and December 2002, March 2003 

             Edit        - June and December 2002, March 2003 


       Prior to September 04. 2003. employees would clock-in each morning and clock out
       when they left at 5:30 P.M. each afternoon. An employees being paid from different
       funding sources are required to clock out at 3:30 P.M. and clock back in at 3:32 P.M.
       This will provide documentation for payment from different funding sources.

       21 Sf Century Coordinators are required to document at what times they were working for
       Title I. 21 it Century. etc. to differentiate the funding sources for payment.

       Student workers will be required to sign their time sheets each day or at the end of a pay
       period. At the bottom of each time sheet is a statement informing students they are paid
       for 1 hour ofwork and 1 hour is volunteer.

       TfT can be of further assistance. please contact me a 662-283-4533.




       ~~
       Carolyn Swanson
       Superintendent
   12/15/2003     09:34    8877051                           CENTRAL OFFICE                    PAGE   02

                                                                                   ATTACHMENT B

                              6unflotuer C!l:ount!' 6cbool118isttict
                                            THOMAS EDWARDS, SUPT.
                                                  P.O. BOX 70
                                          INDIANOLA. MISSISSIPPI 38751
TELEPHONE (682) 587-4919                                                                FAX (662) 88H051
                                            December 9, 2003




            Ms. Sherri L. Demmel 

           ,Regional Inspector General for Audi 

            U. S. Department of Education 

            Office of Inspector General, 

            1999 Bryan Street, Suite 2630 

            Dallas, TeXas 75201-6817 


            Dear Ms. Demmel:

            In reference to the Project ASCEND 21     ST
                                                     Century Community Learning centers
            program grant audit, I affirm that the hours worked by the employees were
            correctly paid.

            If you have questions or need additional information, please contact me at (662)
            887~4919.


            Sincerely,


      ~~~JO~
      l.    Th~ma~ Edwards 

            Superintendent of Education 




            cc: 	Mr. Dennis Silas, Superintendent 

                Drew School District