2022-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs and restricted purpose requirements. Assistance Listing Number and Title: 32.009, COVID-19 ? Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $87,696 Background The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as ?unmet need.? In fiscal year 2022, the District spent $603,124 in ECF Program funds to purchase laptops and Wi-Fi hotspots for students. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Allowable activities and costs ECF Program recipients must only seek reimbursement for the eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking and receiving reimbursement for eligible equipment and services purchased for use solely at the school or held for future use (i.e., warehousing). Restricted purpose ? unmet need When submitting applications to the Federal Communications Commission (FCC), schools only had to provide an estimate of their students? and staff?s unmet need. However, when requesting reimbursement, the District could only request program funds for eligible equipment and services provided to students and school staff with actual unmet need. Description of Condition Our audit found the District?s internal controls were ineffective for ensuring it requested reimbursement only for eligible equipment provided to students with a documented unmet need. The District purchased laptops based on its assessment of unmet need, and it requested reimbursement for these purchases totaling $587,119. District employees responsible for the ECF Program knew it was federally funded, and they were familiar with its requirements, including that funds could not be used to purchase laptops solely for use at school or held for future use. The District intentionally purchased fewer laptops with ECF Program funds than the number of students with unmet need, and purchased additional laptops with non-federal funds that were intended to be used in classrooms or stored as backups to meet additional needs as they arose. However, once purchased, the District pooled the laptops from both funding sources together, and did not provide each laptop purchased with ECF Program funds to a student with unmet need before distributing the other laptops. We consider this deficiency in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition District employees responsible for the ECF Program misunderstood the requirements, and they did not know the District could not pool the computers purchased from different funding sources together for the purposes of distribution. Effect of Condition and Questioned Costs Our audit found 236 ECF-funded laptops, which totaled $87,696, were not distributed to students with unmet need. As a result, we are questioning these costs. Federal regulations require the State Auditor?s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. Recommendation We recommend the District work with the granting agency to determine audit resolution. We further recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should request reimbursement only for eligible equipment provided to students with unmet need, and maintain documentation demonstrating compliance with this requirement. District?s Response District employees responsible for the Emergency Connectivity Fund (ECF) Program were aware that the ECF funds must be used only for students with unmet need. At the time of the application the district had 1,700 high school students with unmet need. To ensure compliance with the federal program requirements, the district has purchased only 1,580 devices with the ECF funds (120 less than what was needed to provide one device to each student). The district has also purchased an additional 320 devices with non-federal funds to cover the remaining 120 students with unmet need and to provide a pool of devices to be utilized as back-up if broken or forgotten at home. When the district received all devices, they were tagged, inventoried and checked out to students. The district was not aware that the devices must be kept physically separate based on the funding source (in addition to accounting separation) and as a result did not ensure that all of the 1,580 federally funded devices were distributed before the non-federally funded devices. The district believes that even though federal government did not always provide timely and clear guidance on the funding, the district complied with the federal requirements and met the needs of students who would otherwise lack the access to devices necessary to engage in remote learning. We continue to utilize the 1,580 ECF funded and 320 non-federal funded devices to ensure access to digital learning tools for all our high school students. Auditor?s Remarks The State Auditor?s Office is sympathetic to the significant challenges the District faced during the COVID-19 pandemic, and deeply respects its commitment to student learning despite these challenges. SAO knows that in many cases, governments across Washington received significant pandemic-era federal funds without also receiving clear guidance on how to use them. Then, and now, SAO continues to advocate for clear, timely guidance from federal agencies to make sure Washington governments are not put in a difficult position at audit time. However, when auditing federal programs of any kind, governments must provide documentation to substantiate that they met the grant requirements. As is our practice and audit standards require, we will review the status of this finding during our next audit. We value our partnership with the District in striving for transparency in public service. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.
2022-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs and restricted purpose requirements. Assistance Listing Number and Title: 32.009, COVID-19 ? Emergency Connectivity Fund Program Federal Grantor Name: Federal Communications Commission Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $87,696 Background The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as ?unmet need.? In fiscal year 2022, the District spent $603,124 in ECF Program funds to purchase laptops and Wi-Fi hotspots for students. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Allowable activities and costs ECF Program recipients must only seek reimbursement for the eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking and receiving reimbursement for eligible equipment and services purchased for use solely at the school or held for future use (i.e., warehousing). Restricted purpose ? unmet need When submitting applications to the Federal Communications Commission (FCC), schools only had to provide an estimate of their students? and staff?s unmet need. However, when requesting reimbursement, the District could only request program funds for eligible equipment and services provided to students and school staff with actual unmet need. Description of Condition Our audit found the District?s internal controls were ineffective for ensuring it requested reimbursement only for eligible equipment provided to students with a documented unmet need. The District purchased laptops based on its assessment of unmet need, and it requested reimbursement for these purchases totaling $587,119. District employees responsible for the ECF Program knew it was federally funded, and they were familiar with its requirements, including that funds could not be used to purchase laptops solely for use at school or held for future use. The District intentionally purchased fewer laptops with ECF Program funds than the number of students with unmet need, and purchased additional laptops with non-federal funds that were intended to be used in classrooms or stored as backups to meet additional needs as they arose. However, once purchased, the District pooled the laptops from both funding sources together, and did not provide each laptop purchased with ECF Program funds to a student with unmet need before distributing the other laptops. We consider this deficiency in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition District employees responsible for the ECF Program misunderstood the requirements, and they did not know the District could not pool the computers purchased from different funding sources together for the purposes of distribution. Effect of Condition and Questioned Costs Our audit found 236 ECF-funded laptops, which totaled $87,696, were not distributed to students with unmet need. As a result, we are questioning these costs. Federal regulations require the State Auditor?s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. Recommendation We recommend the District work with the granting agency to determine audit resolution. We further recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should request reimbursement only for eligible equipment provided to students with unmet need, and maintain documentation demonstrating compliance with this requirement. District?s Response District employees responsible for the Emergency Connectivity Fund (ECF) Program were aware that the ECF funds must be used only for students with unmet need. At the time of the application the district had 1,700 high school students with unmet need. To ensure compliance with the federal program requirements, the district has purchased only 1,580 devices with the ECF funds (120 less than what was needed to provide one device to each student). The district has also purchased an additional 320 devices with non-federal funds to cover the remaining 120 students with unmet need and to provide a pool of devices to be utilized as back-up if broken or forgotten at home. When the district received all devices, they were tagged, inventoried and checked out to students. The district was not aware that the devices must be kept physically separate based on the funding source (in addition to accounting separation) and as a result did not ensure that all of the 1,580 federally funded devices were distributed before the non-federally funded devices. The district believes that even though federal government did not always provide timely and clear guidance on the funding, the district complied with the federal requirements and met the needs of students who would otherwise lack the access to devices necessary to engage in remote learning. We continue to utilize the 1,580 ECF funded and 320 non-federal funded devices to ensure access to digital learning tools for all our high school students. Auditor?s Remarks The State Auditor?s Office is sympathetic to the significant challenges the District faced during the COVID-19 pandemic, and deeply respects its commitment to student learning despite these challenges. SAO knows that in many cases, governments across Washington received significant pandemic-era federal funds without also receiving clear guidance on how to use them. Then, and now, SAO continues to advocate for clear, timely guidance from federal agencies to make sure Washington governments are not put in a difficult position at audit time. However, when auditing federal programs of any kind, governments must provide documentation to substantiate that they met the grant requirements. As is our practice and audit standards require, we will review the status of this finding during our next audit. We value our partnership with the District in striving for transparency in public service. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.