June 2, 2004

**Control Number ED-OIG/A03-D0010**

Bonnie S. Copeland, Ph.D.\
Interim Chief Executive Officer

Baltimore City Public School System

200 E. North Avenue

Baltimore, MD 21202

Dear Dr. Copeland:

This **Final Audit Report** presents the results of our audit of
Baltimore City Public School's (BCPS) Administration of its 21^st^
Century Community Learning Center (21^st^ CCLC) Grant program. Our audit
objective was to determine if BCPS's expenditures of 21^st^ CCLC grant
funds were reasonable, allowable and allocable in accordance with the
Elementary and Secondary Education Act of 1965, as amended (ESEA),
Education Department General Administration Regulations (EDGAR), grant
terms, and the cost principles in Office of Management and Budget (OMB)
Circular A-87. Our audit covered the period June 1, 2001, through
February 28, 2003.

We provided a copy of our draft report to BCPS. In its response to the
report, BCPS agreed with all our findings and recommendations and plans
to offset its next drawdown by an additional \$30,000.[^1] We have
summarized BCPS' comments in the AUDIT RESULTS section of the report.
The full text of the comments is included as Enclosure 2.

## AUDIT RESULTS

We identified management control weaknesses that adversely affected
BCPS's ability to properly account for expenditures and administer its
21^st^ CCLC program. Specifically, we found that BCPS had inadequate
financial management controls and did not keep records of its 21^st^
CCLC program in-kind contributions. In addition, we determined that
BCPS's 21^st^ CCLC program expenditures were not always reasonable,
allowable, and allocable in accordance with ESEA, as amended, EDGAR,
grant terms, and the cost principles in OMB Circular A-87, as BCPS
expended \$43,821 for unallowable and unsupported costs.

**Finding No. 1 BCPS's Management Controls Need Improvement**

Our audit identified management control weaknesses that adversely
affected BCPS's ability to administer its 21^st^ CCLC program.
Specifically, BCPS had inadequate financial accounting system controls,
failed to inventory computer equipment purchased with grant funds, had
inadequate review and approval of accounting forms, and lacked formal
written policies and procedures. The details of these weaknesses are
discussed below.

**[Inadequate Financial Accounting System Controls]{.smallcaps}**

### [BCPS's Oracle financial management system did not have adequate controls.]{.underline} 

BCPS\'s Oracle financial accounting system allowed any cost center[^2]
to post expenditures to any valid budget account, whether or not that
cost center was included in the approved grant-spending plan.[^3]
Furthermore, BCPS\'s Oracle financial accounting system did not prevent
employees from posting to accounts with insufficient funds to cover the
expenditures. During the audit period, BCPS\'s Oracle financial
accounting system permitted a total of \$170,508 to be charged to the
21^st^ CCLC grant that were either over budget, unallowable,
unsupported, or unallocable. According to BCPS's Budget Office
personnel, BCPS management minimized validation controls within its
Oracle financial accounting system in order to decrease the number of
system rejects and exceptions.

# BCPS's fiscal year 2003 CCLC budget was not loaded into its Oracle financial management system prior to posting expenditures. 

BCPS posted expenses against 21st CCLC grant funds prior to the loading
of its FY 2003 21^st^ CCLC grant budget (spending plan) into its Oracle
financial management accounting system. BCPS did not prepare or load the
spending plan until after January 2003, approximately six months after
the start of the fiscal year. BCPS should have approved this spending
plan and loaded it into its accounting system prior to July 1, 2002, the
beginning of BCPS\'s fiscal year.

Budgetary controls are a critical part of financial management controls
as they help to prevent overspending and improper charges. In addition,
according to 34 C.F.R. § 80.20(b)(3) and (4),[^4] BCPS must maintain
effective control and accountability for all grant cash and compare
actual 21^st^ CCLC expenditures or outlays with budgeted amounts. BCPS
must adequately safeguard this cash and assure that it is used solely
for authorized purposes.

### [Inadequate Controls over Equipment Purchases]{.smallcaps}

BCPS did not maintain adequate inventory records for computer equipment
purchased for the Thomas Jefferson Elementary School's (Thomas
Jefferson) 21st CCLC program. Additionally, BCPS did not use the
equipment to serve its 21^st^ CCLC program.

BCPS acquired five computers and five monitors for Thomas Jefferson's
21st CCLC program, but did not inventory them. During our review, school
officials could not determine the location of the equipment until a
search of the school was performed. We informed BCPS of this finding
during our on-site fieldwork and BCPS placed the computer equipment in
Thomas Jefferson's 21^st^ CCLC computer lab, so that students in the
program could benefit from it.

The regulations at 34 C.F.R. 80.32(d) require the maintenance of
inventory records for nonexpendable personal property acquired in whole
or in part with federal funds. Property records must be maintained that
include among other things, a description of the property, serial number
\[or other identification number\] and the location.

### [Financial Accounting Forms Were Not Properly Approved]{.smallcaps} 

# Failure to follow instructions on Authorization to Pay (ATP) form

BCPS did not properly complete its ATP forms according to the written
instructions. All 28 expenditures we reviewed that required the use of
an ATP form were approved for payment without having the appropriate
signature to authorize the payments. Two of the 28 forms were determined
to include \$2,846 in unallowable costs, which may have been avoided had
the forms been properly authorized for payment. BCPS processed all
invoices under \$5,000 using an ATP form. The instructions on the form
required two signatures: (1) one signature to certify that the listed
services were rendered in a satisfactory manner and that notice to that
effect from the party in charge is on file in their department, and (2)
another signature to authorize the payment.

[Thomas Jefferson officials did not properly approve the Sundry
Education Services Payment Order (SESPO) form]{.underline}

BCPS uses the SESPO form to record payroll data. We reviewed 11 SESPO
forms processed by Thomas Jefferson during the pay periods ending
November 12, 2002, and November 26, 2002, and determined that the forms
were not properly approved. To be proper, the SESPO forms should have
been approved by either the grant manager or project director, or the
principal if these individuals are absent. Such approval attests to the
accuracy of the time reported and confirms that the appropriate budget
account number is being charged. The Payroll Department, which receives
the original copy of the form and relies upon the information contained
on it, should not have processed the forms without the appropriate
signature.

# Controls over Temporary Employment (TE) form need strengthening

During our analysis of expenditures charged to the grant, we reviewed
costs charged for temporary employment. BCPS used the TE form to approve
payment of payroll costs for part-time temporary employment services.
The TE form required a budgetary approval signature for positions funded
by a grant; however, none of the four TE forms we sampled had this
approval. In addition, the form does not require any approval by the
21^st^ CCLC grant manager. BCPS should require the grant manager to
review and approve (by signature) all TE forms relating to the 21st CCLC
grant to insure that all information is accurate and in accordance with
the approved spending plan. Finally, the TE forms we reviewed identified
permissible costs for the grant, but these costs were not associated
with any BCPS sub-object codes. BCPS should revise the TE form to
include sub-object codes, so that the Budget Department knows which
sub-object code the payroll costs should be associated with in order to
determine if the costs are in line with the approved spending plan.

Completing and properly approving the ATP and SESPO forms and revising
the TE form will strengthen management controls and accountability over
the costs charged to Federal grant funds.

### [Lack of Formal Policies & Procedures]{.smallcaps}

BCPS had no formal written policies and procedures to properly
administer its grants accounting and management, accounts payable,
stipend processing, drawdown processing, and budget operations. [^5]
Documented policies and procedures are a sound business practice as they
set forth an organization\'s financial and operational management
controls. The lack of documented policies and procedures may result in
inconsistencies, non-compliance with laws and regulations and processing
or procedural errors.

**Recommendations:**

We recommend the Chief Financial Officer in conjunction with the
Assistant Secretary for Elementary and Secondary Education require BCPS
to:

1.  Implement validation rules and controls within its Oracle financial
    accounting system or develop and implement other financial
    management controls to prevent budget overruns, unallocated,
    unallowable and questionable expenditures from being paid with
    federal funds;

2.  Prepare, approve, and load its fiscal budget (spending plan) into
    its Oracle financial management system, prior to expending any funds
    for the fiscal year;

3.  Perform and maintain an inventory of equipment purchased with 21st
    CCLC grant funds and ensure that any computer equipment purchased
    with 21^st^ CCLC grant funds is properly located and used for
    intended purposes;

4.  Implement adequate management controls over the preparation and
    approval of the ATP and TE forms, including revising the TE form to
    include allowable sub-object codes. Also, require the grant manager
    to review and approve all TE forms relating to the grant. In
    addition, ensure that all forms receive a budgetary approval
    signature, as required; and

5.  Develop and implement formal written policies and procedures
    pertaining to stipend and drawdown processing, grant accounting and
    management, accounts payable, and budget operations departments.

**[BCPS' Comments]{.smallcaps}**

BCPS agreed with the finding and the recommendations. BCPS plans to
develop formal written policies and procedures and implement system and
budgetary controls in its Oracle financial accounting system. BCPS
stated it has implemented new payroll procedures to address the
financial accounting form weaknesses noted during our audit.

**Finding No. 2 BCPS Charged Unallowable and Unsupported Costs to the
21^st^ CCLC Grant**

BCPS did not properly account for and use 21^st^ CCLC grant funds in
accordance with the applicable regulations, grant terms, and cost
principles. Of the \$141,848 in grant costs we reviewed, \$42,986 was
unallowable and \$835 was unsupported. The unallowable costs were for
payroll (\$4,971), fringe benefits (\$280), transportation (\$1,480),
computer and office equipment (\$5,430), supplies (\$1,366), and
contractual services (\$29,459). The unsupported costs were for payroll
(\$776) and fringe benefits (\$59). BCPS refunded \$13,407 of the
unallowable costs prior to the issuance of the draft report.

OMB Circular A-87, *Cost Principles for State,* *Local,* *and Indian
Tribal Governments,* *Attachment A, Paragraph C.1* (1997) provides, in
part, that

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.

Furthermore, 34 C.F.R. § 75.730 states that, "A grantee shall keep
records that fully show . . . (b) How the grantee uses the funds; (c)
The total cost of the project . . . (e) Other records to facilitate an
effective audit. "

BCPS's inadequate financial management controls addressed in Finding
Number 1 allowed the unallowable and unsupported costs to occur. For
example, BCPS's Oracle financial accounting system allowed cost centers
to post expenditures to any valid budget account number, whether or not
the cost center or even the sub-object code was included in the approved
grant-spending plan. As a result of the inadequate financial management
controls, employees that did not work on the program were paid with
grant funds, payroll costs were processed without the appropriate
approvals and did not agree to or were not supported by the time and
attendance records. In addition, the school principal at Thomas
Jefferson did not appear to have been aware of the 21^st^ CCLC guidance,
laws, and regulations. As a result, unallowable payroll and travel costs
were charged to the grant.

Details of the unallowable and unsupported costs are discussed in
Enclosure 1.

**Recommendations:**

We recommend that the Chief Financial Officer in conjunction with the
Assistant Secretary for Elementary and Secondary Education require BCPS
to:

1.  Refund the \$29,579 (\$42,986-\$13,407) for the unallowable
    expenditures;

2.  Provide adequate supporting documentation for the \$835 in
    unsupported expenditures or refund the portion that ED determines
    has not been adequately documented;

3.  Develop and implement financial management controls that will: a)
    ensure that only individuals participating in the program are
    compensated with grant funds, b) ensure that employees are only
    compensated for time actually worked and supported by the time and
    attendance sheets, and c) identify individuals authorized to approve
    grant expenses for final payment; and

4.  Ensure that 21st CCLC school principals are aware of and follow 21st
    CCLC guidance, laws and regulations.

**[BCPS' Comments]{.smallcaps}**

BCPS agreed with our finding and the recommendations. BCPS stated it
would offset its next drawdown by \$30,000 (\$835 and \$29,459).

**[OIG's Response]{.smallcaps}**

BCPS should refund \$30,414 (\$29,579 + \$835). This amount represents
the unallowable (\$29,459+\$120) and unsupported expenditures (\$835)
not previously refunded. The amount BCPS agreed to offset only includes
the unsupported expenditures and the unallowable expenditure for the
contractual services (\$29,459), totaling \$30,294, which BCPS rounded
to \$30,000. BCPS did not include the \$120 stipend payment to one
senior citizen volunteer that was not previously refunded (See Enclosure
1, B.).

# 

# Finding No. 3 BCPS Did Not Keep Records of In-Kind Contributions

BCPS did not maintain a record of its 21^st^ CCLC in-kind contributions
since the grant was awarded on June 1, 2001. Over the lifetime of the
grant BCPS estimated it would contribute approximately \$624,000 of
local funds in implementing its 21st CCLC program. However, BCPS stopped
tracking local contributions for all its grants when its Oracle
financial management system was implemented several years ago. According
to a BCPS official, the Oracle system did not offer BCPS an effective
way of tracking in-kind contributions. Because in-kind contributions
were not tracked, we could not determine whether BCPS invested the
promised level of local resources to implement its 21^st^ CCLC program.

The regulations at 34 C.F.R. § 75.730(c) and (d) require that a grantee
keep records that fully show the total cost of the project and the share
of that cost provided from other sources. In addition, BCPS\'s in-kind
contributions must be verifiable and its records must show how the value
placed on third-party in-kind contributions was derived \[34 C.F.R. §
80.24 (b)(6)\].

**Recommendation:**

We recommend that the Chief Financial Officer in conjunction with the
Assistant Secretary for Elementary and Secondary Education require BCPS
to:

3.1 Develop and implement a method to track its in-kind contributions.

# 

**[BCPS' Comments]{.smallcaps}**

BCPS agreed with our finding and recommendation. BCPS plans to develop
and implement an in-kind contribution tracking mechanism.

# 

#  

# OTHER MATTERS

In addition to the findings discussed in the Audit Results section of
this report, we noted the following issues. We are reporting these
issues for appropriate corrective action.

**[BCPS\'s FY 2002 Spending Plan and Loaded Budget Were Not in
Agreement]{.underline}**

During FY 2002,[^6] BCPS did not properly load its 21st CCLC
program-spending plan into its Oracle financial accounting system. We
noted four instances where sub-object code amounts loaded into the FY
2002 budget did not agree with the amounts listed on BCPS\'s approved
spending plan. BCPS overspent one of these line items by over
\$38,000.[^7] We also noted one instance where an amount loaded into a
sub-object code in the Oracle financial accounting system was not
included in the approved spending plan.

The regulations at 34 C.F.R. § 75.702 require that a grantee \" . . .
use fiscal control and fund accounting procedures that insure proper
disbursement of and accounting for Federal funds.\" Budgetary controls
are a critical part of financial management controls as they help to
prevent overspending and improper charges.

We suggest BCPS properly load its fiscal budget (spending plan) into its
Oracle financial management system prior to expending any funds for the
fiscal year. BCPS agreed with our suggestion and is currently
implementing a new budget process.

**[BCPS Did Not Obtain Written Authorization to Support the
Implementation of Two New 21^st^ CCLC Sites]{.underline}**

During FY 2003, BCPS added two schools (Gardenville and Federal Hill) to
their 21^st^ CCLC program. However, BCPS did not obtain written
authorization from ED to add these schools to its 21^st^ CCLC program.
According to 34 C.F.R. § 80.30 (d)(1), grantees must obtain the prior
approval of ED whenever they anticipate any revision of the scope or
objective of the project (regardless of whether there is an associated
budget revision requiring prior approval). The addition of the two
schools is a revision of the scope and clearly required prior approval.

We suggest BCPS obtain written authorization from ED prior to making any
major changes in its budget. BCPS agreed with our suggestion.

## BACKGROUND

Title X, Part I, of the ESEA, as amended, authorizes the 21^st^ CCLC
grants that fund rural and inner-city public elementary or secondary
schools, or consortia of such schools, to enable the implementation, or
expansion of projects that benefit the educational, health, social
service, cultural, and recreational needs of a rural or inner-city
community.

A community learning center (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. The center should be operated by a local
educational agency in conjunction with local governmental agencies,
businesses, vocational education programs, institutions of higher
education, community colleges, and cultural, recreational, and other
community and health service entities. The centers must include no less
than 4 of the 13 activities listed in Title X, Part I, Section 10905, of
the ESEA, as amended.

ED awarded BCPS \$1,226,190 in 21^st^ CCLC grant funds for the
three-year period June 1, 2001, through May 31, 2004. The award amounts,
by year, are:

> [Period]{.underline} [Award Amount]{.underline}
>
> 06/01/2001-05/31/2002 \$ 224,981
>
> 06/01/2002-05/31/2003 \$ 499,790
>
> 06/01/2003-05/31/2004 [\$ 501,419]{.underline}
>
> Total \$1,226,190

During our audit period (June 1, 2001, through February 28, 2003), BCPS
expended \$330,232 of these grant funds by operating programs at the
following schools: Thomas Jefferson, Samuel Coleridge-Taylor Elementary
School, and Patapsco Elementary School. BCPS's three 21^st^ CCLC sites
operated three days a week, two to three hours per day, immediately
following dismissal. The first hour was devoted to academic instruction.
During the next one to two hours, students received assistance with
homework and participated in enrichment activities. During the second
year of its program, BCPS added two additional sites, Federal Hill
Preparatory School and Gardenville Elementary School, to its 21^st^ CCLC
program.

The goals of BCPS's programs were to improve the academic performance of
children, by focusing attention on reading, language, mathematics and
science. BCPS's associated activities were structured to develop social
skills and teach children to handle conflicts in more socially
acceptable ways. The programs also included technological, cultural, and
recreational activities to guide learning and engage children in
activities identified by BCPS as being wholesome.

## OBJECTIVE, SCOPE, AND METHODOLOGY

The objective of our audit was to determine if BCPS's expenditures of
21^st^ CCLC grant funds were reasonable, allowable and allocable in
accordance with ESEA, EDGAR, grant terms, and the cost principles in OMB
Circular A-87. To accomplish our objective, we:

-   Reviewed BCPS's OMB Circular A-133 (Single Audit) audit report for
    the period ending June 30, 2001, and a draft of BCPS's Single Audit
    audit report for the period ending June 30, 2002;

-   Reviewed BCPS's internal audit reports for the payables and
    procurement functions;

-   Reviewed BCPS's 21st CCLC grant application and budget narrative;

-   Reviewed BCPS's 21st CCLC grant performance reports for the periods
    June 1, 2001, through May 30, 2002; and June 1, 2002, through May
    30, 2003;

-   Reviewed BCPS's Standard Operating Procedures for accounting,
    procurement, payroll, and fringe benefits;

-   Reviewed ED and BCPS's 21^st^ CCLC drawdown and disbursement
    records;

-   Randomly selected and reviewed 30 other than personnel service
    (OTPS) expenditures, totaling \$42,940 from a universe of 158 OTPS
    expenditures, totaling \$156,658;

-   Randomly selected and reviewed 20 payroll transactions, totaling
    \$20,438 from a universe of 299 payroll transactions, totaling
    \$129,099;

-   Reviewed all 14 payroll transactions for the Grant Manager, totaling
    \$25,732, which were posted to BCPS's payroll account on February
    21, 2003;

-   Reviewed all 5 payroll transactions, totaling \$1,140 and three
    stipend transactions, totaling \$360, for all 21^st^ CCLC senior
    citizen volunteers; and

-   Interviewed officials from BCPS and from ED's Office of Elementary
    and Secondary Education.

To achieve our audit objective, we relied in part on computer-processed
data contained in BCPS's financial account system (Oracle). We assessed
the reliability of this data including the relevant general controls and
found them to be adequate. We tested the accuracy, authenticity, and
completeness of the data by comparing source records to computer data.
Based on these tests and assessments we concluded that the data were
sufficiently reliable to be used in meeting the audit's objective.

We conducted the fieldwork at BCPS's offices in Baltimore, Maryland from
March 17, 2003, through April 11, 2003. We also performed fieldwork at
Thomas Jefferson in Baltimore, Maryland on March 31, 2003. We reviewed
additional documentation that was provided by BCPS in December 2003. An
exit conference was held on December 17, 2003.

We conducted the audit in accordance with generally accepted government
auditing standards appropriate to the scope of review described above.

## 

## STATEMENT ON MANAGEMENT CONTROLS

As part of our review we assessed the system of management controls,
policies, procedures, and practices applicable to BCPS's administration
of its 21^st^ CCLC grant program. Our assessment was performed to
determine the level of control risk for determining the nature, extent,
and timing of our substantive tests to accomplish the audit objectives.

For the purpose of this report, we assessed and classified the
significant controls into the following categories:

-   Budgeting;

-   Disbursements;

-   Records Management; and

-   Time and Effort Reporting.

Because of inherent limitations, a study and evaluation made for the
limited purpose described above would not necessarily disclose all
material weaknesses in the management controls. However, our assessment
disclosed financial management control weaknesses that existed in BCPS's
administration of the 21^st^ CCLC program. These weaknesses and their
effects are fully 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.

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 J. Simon
>
> Assistant Secretary for Elementary and Secondary Education
>
> U.S. Department of Education
>
> 400 Maryland Avenue, SW, Room 3W315
>
> 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 the Freedom of Information Act (5 U.S.C. § 552),
reports issued by the Office of Inspector General are available to
members of the press and general public to the extent information
contained therein is not subject to exemptions in the Act.

> Sincerely,
>
> /s/
>
> Bernard E. Tadley
>
> Regional Inspector General for Audit

Enclosures

Enclosure 1

**BALTIMORE CITY PUBLIC SCHOOL'S 21ST CENTURY GRANT**

**SCHEDULE OF COSTS RECOMMENDED FOR ACCEPTANCE, UNALLOWABLE COSTS, AND
COSTS THAT ARE UNSUPPORTED**

# JUNE 1, 2001, THROUGH FEBRUARY 28, 2003

+---------+----------+-----------+-----------+------------+-----------+
| **Cost  | **Total  | **Un      | **Un      | **Total    | **Total   |
| Cat     | Costs    | allowable | supported | Una        | Costs     |
| egory** | Reviewed | Costs**   | Costs**   | llowable** | Re        |
|         | During   |           |           |            | commended |
|         | Audit**  |           |           | **&        | for       |
|         |          |           |           | U          | Acc       |
|         |          |           |           | nsupported | eptance** |
|         |          |           |           | Costs**    |           |
+---------+----------+-----------+-----------+------------+-----------+
| **Pers  | **\$50,4 | *         | (E)       | *          | **\       |
| onnel** | 00**[^8] | *^(A),^** | **\$835** | *\$6,086** | $44,314** |
|         |          | **^(B)^** |           |            |           |
| **&     |          | **        |           |            |           |
| Fringe  |          | \$5,251** |           |            |           |
| Ben     |          |           |           |            |           |
| efits** |          | **^(C)^** |           |            |           |
|         |          | **^       |           |            |           |
|         |          | ,\ (D)^** |           |            |           |
+---------+----------+-----------+-----------+------------+-----------+
| **T     | *        | **^(F)^   |           | **1,480**  | **362**   |
| ravel** | *1,842** | 1,480**   |           |            |           |
+---------+----------+-----------+-----------+------------+-----------+
| **Equi  | **       | **^(G)^** |           | **5,430**  | *         |
| pment** | 18,218** | **5,430** |           |            | *12,788** |
+---------+----------+-----------+-----------+------------+-----------+
| **Sup   | *        | **^(H)^   |           | **1,366**  | **6,871** |
| plies** | *8,237** | 1,366**   |           |            |           |
+---------+----------+-----------+-----------+------------+-----------+
| *       | **       | **^(I)^   |           | **29,459** | *         |
| *Contra | 63,512** | 29,459**  |           |            | *34,053** |
| ctual** |          |           |           |            |           |
+---------+----------+-----------+-----------+------------+-----------+
| # TOTAL | **\$1    | **\       | **\$835** | **         | **\       |
|         | 42,208** | $42,986** |           | \$43,821** | $98,387** |
+---------+----------+-----------+-----------+------------+-----------+

A.  **[Non-21st CCLC employees.]{.underline}** During our review of all
    21^st^ CCLC programmatic costs for the audit period, we noted three
    instances totaling \$1,485, where individuals were compensated with
    21st CCLC grant funds, yet were not 21st CCLC employees.

B.  **[Senior citizen volunteers.]{.underline}** During the month of May
    2002, BCPS paid three senior citizen volunteers working at Thomas
    Jefferson a total of \$360 in stipends (\$120 each), in addition to
    paying them a salary. The project director approved the volunteers
    to receive stipend payments but was unaware that the school
    principal had already authorized them to receive salary payments.
    Since the volunteers were classified as temporary employees, the
    stipend payments were unallowable.

C.  **[Overcompensation of employees.]{.underline}** We identified
    \$2,740 in unallowable costs for six of the 20 BCPS 21st CCLC
    payroll transactions we reviewed. For these transactions, BCPS\'s
    time and attendance sheets did not support the hours for which
    BCPS\'s 21st CCLC employees were compensated.

D.  **[Health & pension costs.]{.underline}** During fiscal years 2002
    and 2003, BCPS charged a total of \$666 in unallowable health and
    pension costs to the grant for six employees working in BCPS's 21st
    CCLC program. Health and pension costs were not allowable grant
    costs. According to BCPS's policy for temporary employment,
    employees hired for BCPS's 21^st^ CCLC grant program can only be
    compensated for wages and applicable FICA taxes.

E.  **[Unsupported payroll costs]{.underline}.** We identified
    unsupported costs from a judgmentally selected sample of Thomas
    Jefferson's 21st CCLC program sign-in sheets for the pay period
    ending November 26, 2002. We noted a total of nine exceptions, eight
    instances where the employees either did not sign the timesheet at
    all or signed the timesheet and did not enter the time they began
    work or the time they ended and one instance where an employee was
    compensated for more time than was certified by their time sheet.
    Without employees properly signing in and out, there is no evidence
    to show that the employees did in fact provide to the school all the
    services for which they were compensated.

F.  **[Thomas Jefferson zoo bus trip.]{.underline}** In June 2002, grant
    funds were expended to pay for bus service for an unallowable
    fieldtrip for students at Thomas Jefferson. This was a school-wide
    trip that took place during school hours and was approved by the
    school principal without the knowledge of the grant manager or
    project director. According to 21^st^ CCLC non-regulatory guidance,
    issued in February 2003 by ED (a draft was released in May 2002),
    community-learning centers must offer services only during
    non-school hours or periods when school is not in session (i.e.,
    before school, after school, evenings, holidays, school vacation
    periods).

G.  **[Computer equipment purchased for BCPS's Title I
    program.]{.underline}**

During FY 2002, BCPS charged unallowable expenses to the 21st CCLC grant
for the purchase of a laser printer (\$2,405), projector (\$1,588),
copier (\$448), and flat screen monitor (\$989). The equipment was being
used to create newsletters and other After School Intervention
strategies for BCPS's Title I program.

H.  **[Thomas Jefferson staff celebration.]{.underline}** BCPS charged
    an unallowable expense to the 21st CCLC grant for a Thomas Jefferson
    staff celebration held in June 2002. According to BCPS\'s grant
    application, all food cost expenses to the 21^st^ CCLC grant would
    be incurred for parent workshops only. No parents attended the event
    and no workshop was held.

### [Office Team costs charged to the grant were unallowable and questionable.]{.underline} BCPS charged the 21st CCLC grant a total of \$61,012 for contractual administrative services. We consider \$29,459 (represents costs for one individual) of this amount to be unallowable because the expenditures were unreasonable. From March 2002, through December 2002 \[41 pay periods\], BCPS hired two individuals from Office Team to perform administrative services. According to one individual, she typed, gathered and created grant program information, and prepared performance reports. For 38 of the 41 pay periods, the two clerical assistants worked in BCPS\'s Title I office at the same time. The work performed did not support the 2,789 hours charged to the grant. We believe one individual could have performed the work. As further evidence of this, during the exit conference BCPS officials informed us that in addition to adding more schools to its program, administrative services would be performed by one individual. 

[^1]: This amount represents a portion of the remaining unallowable and
    unsupported costs not refunded to the grant prior to the issuance of
    the draft report.

[^2]: A cost center is an organizational unit, such as a school site or
    departmental office, for which costs are incurred.

[^3]: A spending plan is the budget for the grant.

[^4]: Unless otherwise specified, all regulatory citations are to the
    March 5, 2001 edition of EDGAR.

[^5]: ^5^ BCPS had recently drafted accounts payable policies and
    procedures, which were being reviewed. BCPS also recently provided
    grant managers with general written procedures on applying for,
    processing, and managing grant awards. We did not review BCPS\'s
    recently drafted accounts payable policies and procedures but did
    review the procedures BCPS provided to its grant managers. We found
    these procedures to be informal and very general in nature. They
    did, however, represent an attempt by BCPS to begin implementing and
    strengthening its management controls.

[^6]: FY 2002 represents the period June 1, 2001, through May 30, 2003.

[^7]: For FY 2002, BCPS budgeted \$31,000 for contractual services, yet
    expended \$69,870.

[^8]: This amount includes \$360 in stipend costs, \$46,486 in personnel
    costs, and \$3,554 in fringe benefit costs.