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Chesterfield County School District placed on fiscal watch by SCDE

The South Carolina Department of Education (SCDE) placed the Chesterfield County School District on its fiscal watch list.
An intent to declare fiscal watch letter, dated Jan. 25, was sent to the district due to material weaknesses noted in its 2022-23 audit.
The district had 60 days from the date of the declaration to send a recovery plan outlining the corrections made to fix the issues. Once the recovery plan was received, a letter from the SCDE stating whether it was approved or denied was issued.
In a letter dated Feb. 29, the SCDE said it had received the corrective action plan on Feb. 8.
The letter said, “The SCDE appreciates the efforts of the superintendent and key district personnel in detailing the district’s plan to remedy the audit findings. Due to the nature of these findings, this letter represents the official declaration of the fiscal watch. The corrective action plan submitted by the district will serve as the approved recovery plan by SCDE.”
In the corrective action plan, the four issues were addressed along with the corrective actions.
The first was internal controls surrounding claim reconciliation and reimbursement condition.
It meant the district failed to reconcile expenditures to filed claims to ensure that all expenditures were appropriately accounted for and timely claimed by the SCDE deadline of Aug. 15. The failure in the design of internal controls led to the Districts’ oversight of not timely claiming certain funds for the Education Stabilization Fund and the Special Education Cluster for $834,955 and $1,838,443, respectively. In addition, after performing appropriate reconciliations and final claims of the Education Stabilization Fund, the district had overclaimed funds and is required to return $114,865 to the SC Department of Education for use in future fiscal years.
The corrective action involved the district implementing additional internal controls and monitoring around claiming and reconciling federal funds.
The second issue was internal controls over compliance with documentation of personnel expenses condition.
It meant the district did not appropriately reflect the federal awards for which certain employee salaries and wages were charged, including the improper use of a semi-annual certification and timesheets that do not depict the federal award from which the salaries and wages are paid.
The corrective action was that the district will communicate with all departments that pre-filled forms should not be utilized when documenting salaries and wages charged to federal awards. Additionally, the district has reviewed all employees with recurring federal time and effort requirements to ensure the proper forms are completed. Monitoring will occur at the beginning of each semester to ensure all required time and effort documentation has been completed and collected.
The third issue was internal controls over compliance and non-compliance with wage rate requirements condition. This meant certain district federally funded construction contracts did not contain the appropriate contract provisions for contractor compliance with wage rate requirements, nor were weekly certified payrolls obtained from contractors before payment.
The corrective action involved the district putting into place a procedure requiring the procurement officer to review all federal purchase requisitions greater than $2,000 to ensure that the Davis-Bacon Act requirements are met in all applicable situations. Additionally, the procurement officer at the district will be required to monitor and track all projects, including Davis-Bacon Act provisions, to ensure compliance with all regulations pertaining to the Act. This will include reviewing and approving all invoices or pay applications to ensure timely and accurate submittal of weekly payroll documentation from vendors before remitting payment.
The final issue was internal controls surrounding the recording and reconciling of P-Card transactions condition. It meant the district failed to record and reconcile certain P-Card transactions through the credit card processor. Prior period amounts of $7,788 and current period amounts of $138,729 had not been categorized and recorded in the district’s general ledgers.
The corrective action involved the district implementing additional internal controls regarding the recording and reconciling of P-Card transactions.
Chesterfield County School District made the following statement about the fiscal watch.
“On Feb. 23, the S.C. Department of Education placed Chesterfield County School District on a one-year fiscal watch designation as a result of the fiscal year 2023 financial statement audit findings. As a result, the district has provided a corrective action plan that has not only been fully implemented but has been approved by the SC Department of Education. The district fully expects to be removed from this designation when we are re-evaluated following the fiscal year 2024 audit next winter.”
District officials also noted, “The findings did not come as a result of any lost or misallocated funds but were simply the result of deficiencies in our internal control framework. All of the deficiencies have been corrected. We want to extend our appreciation for the State Department’s willingness to provide technical assistance and guidance as we navigate this designation.”
The fiscal year 2022-23 audit report is posted on the district website and details each of the findings and which internal controls were deficient.
In a statement, district officials said, “Fiscal watch declaration is an indication by the SC State Department of Education that a district may need additional guidance or technical assistance. We have prepared a corrective action plan, that not only has been fully implemented, but has been reviewed and accepted by the Department. We feel confident in the new internal controls in place and anticipate the removal of our designation following the FY2024 audit.”
A district under a declaration of a fiscal watch must not be released from the fiscal watch in the same fiscal year in which the declaration was made but may be released the following year if the SCDE determines that the corrective actions have been or are being successfully implemented.
The state has three escalating levels of fiscal and budgetary concern: fiscal watch, the lowest level of concern; fiscal caution, an intermediate level of concern; and fiscal emergency, the most severe level of concern.
More information about the district’s 2022-23 audit and findings is available at www.chesterfieldschools.org. Click on departments, then finance. Once in the finance section, click on audit reports.

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