Information for Organizations Selected for a Review

Based on the annual subrecipient monitoring plan, the Federal Fiscal Monitoring Division (FFM) conducts reviews of federal grants awarded to school districts, charter schools, education service centers, and nonprofit entities. Most reviews are conducted as desk reviews. However, if deemed necessary, onsite visits are scheduled to complete the review. The objective of the review is to determine if you have complied with applicable state and federal statutes and regulations including Education Department General and Administrative Regulations (EDGAR)  and with the terms and conditions of your grant agreement.

Review Process

If FFM selects your organization for review, staff will send you a notification letter by email. FFM’s review process is mainly divided into four stages as noted below: 

Notification Letter

The notification letter will identify the grant selected for monitoring and describe the objective, scope, and methodology of the review process. Additionally, the notification letter will include a request for an initial set of documents that you must submit to TEA within 10 business days from date of the letter. Following is a partial list of key documents requested in the notification letter:

• The locally developed and approved administrative procedures manual (APM) in effect during the current school year
• Chart of accounts which lists all general ledger account codes, including all locally defined general ledger account codes in effect during the current year
• Name of the accounting software used as part of your financial management system
• Copies of detailed general ledgers and payroll journals with minimum required elements in both PDF and Excel format
• List of employees paid with grant funds

Request for Supporting Documentation Letter

After completing initial audit procedures, staff will select a sample of payroll and nonpayroll transactions from different budget categories reported in the general ledger and will request supporting documentation for those transactions, which must be submitted within 10 business days from the date of the letter. Following are examples of supporting documentation that may be requested for payroll and non-payroll transactions:

• A signed and dated job description that includes the employee’s official job title
• A copy of the employee’s current license or certification for their job assignment
• For ESSA related programs, the applicable portion of the District Improvement or Campus Improvement Plan with a notation clearly identifying the specific need, goal, strategy, and activity that supports the payroll cost charged to the grant
• Payroll/salary authorization forms
• Time and effort documentation
• Copy of the original internal accounting record (purchase requisition form, purchase order form, expense reimbursement voucher, etc.)
• Copy of the original and complete itemized third-party documents (invoices, receipts, billing statements, etc.)
• Identification of procurement method used for purchasing with related supporting documents
• If the purchase was made through a cooperative, supporting documentation to demonstrate compliance with applicable state and federal (EDGAR) procurement requirements
• Documentation to demonstrate compliance with suspension and debarment requirements
• Documentation supporting professional and contracted services, travel, and training-related costs paid with grant funds

Preliminary Report of Findings and Observations

Based on their examination of records submitted, FFM staff will issue a Preliminary Report of Findings and Observations (preliminary report) identifying findings and observations resulting from the review. Specifically, the preliminary report will identify the finding, criteria for the basis of the finding, potential questioned costs, recommendation for improvements, and required actions to correct the finding. You will have an opportunity to respond to the findings in the preliminary report and provide additional documentation and/or corrective actions to resolve the findings within 10 business days from the date of the report. The preliminary report may also include observations related to improving internal controls that will not require any response from you.

Final Report

Based on your response to the preliminary report, FFM staff will issue a Final Report that will include an addendum to each finding describing the status of the finding. If the finding is resolved though the corrective actions, it will be noted in the addendum and the related questioned costs will be removed from the final report. However, any finding or questioned costs that are not resolved will remain in the final report. Final reports with unresolved findings and/or questioned costs due back to the agency are forwarded to FFM enforcement staff to ensure appropriate corrective actions are taken to resolve them.

Resources

• EDGAR Materials and Resources
• Financial Accounting and Reporting (FAR) Guide
• Minimum Required Elements for General Ledgers and Payroll Journals
• Sample general ledger (TEA is providing this sample solely to demonstrate the use of the required account code structure. You should not interpret the items included as actual allowable costs under a federal grant.)
• Sample payroll journal (TEA is providing these samples solely to demonstrate the use of the required account code structure. You should not interpret the items included as actual allowable costs under a federal grant.)