2023-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs, equipment and restricted purpose requirements.
Assistance Listing Number and Title: 32.009, COVID-19 – Emergency Connectivity Fund Program
Federal Agency Name: Federal Communications Commission
Federal Award/Contract Number: 145233
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
Known Questioned Cost Amount: $686,278
Prior Year Audit Finding: N/A
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 2023, the District spent $686,278 in ECF Program funds to purchase laptops installed with mobile broadband services for students.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
Allowable activities and costs
ECF Program recipients may only seek reimbursement for eligible devices and services provided to students and staff with an unmet need. Recipients are prohibited from seeking reimbursement for eligible equipment and services used solely at the school or held for future use (in other words, warehousing).
Equipment
The Federal Communications Commission (FCC) requires ECF Program recipients to maintain inventories of the devices and services they have purchased with program funds. The FCC also requires inventory records to include specific elements, such as the type of equipment or service provided, equipment make/model and serial number, name of the students or employees provided the equipment or service, dates they used the equipment or service, and more.
Restricted purpose – unmet need
When submitting applications to the 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 with actual unmet need.
Restricted purpose – per-location and per-user limitations
The FCC imposed per-location and per-user limitations to maximize the use of limited funds. Under the program, eligible schools could only be reimbursed for one connected device per student with unmet need.
Description of Condition
Allowable activities and costs/restricted purpose – unmet need
The District estimated unmet need for eligible equipment and services when it applied for ECF Program funds. However, our audit found the District’s internal controls were ineffective for ensuring it documented the determination of actual unmet need and only requested reimbursement for equipment and services provided to students. Specifically, the District purchased laptops, some of which were installed with mobile broadband service, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $686,278. However, the District did not maintain documentation showing it provided each laptop paid for with program funds to a student with unmet need.
Equipment
While the District maintains asset inventories and could locate most of its purchased devices, our audit found the District’s internal controls were ineffective for ensuring its tracking documents included all required elements necessary to demonstrate compliance with federal requirements for this program. Specifically, for 273 of 1,869 laptops purchased with ECF Program funds, the District did not include names of the students provided or responsible for the equipment and related mobile broadband services and the dates they used it.
Restricted purpose – per-location and per-user limitations
Our audit found the District’s internal controls were ineffective for demonstrating it complied with the FCC’s per-location and per-user limitations. Specifically, the District did not maintain documentation showing it monitored or had a tracking process in place to ensure it only provided one device per user and location.
We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance.
Cause of Condition
Allowable activities and costs/restricted purpose – unmet need
Although District employees knew that the ECF Program award was federally funded and were aware of the requirement to request reimbursement only for actual unmet need, they thought the estimate of unmet need provided during the application process was sufficient to comply with this requirement. Additionally, they thought that since they issued devices to all students, replacing obsolescing devices would be sufficient to constitute and support unmet need for the program.
Equipment
The District’s process for checking out devices changed as part of process changes following budget cuts during the pandemic. Previously, the District had dedicated staff members to assist librarians that managed the process to check out devices to students and properly record the check-out in the District’s software. However, the responsibility fell solely on librarians when the District removed these positions. The District did not provide adequate training or oversight to ensure that during this transition, staff were properly recording the check-out of all devices when they were assigned to students, and some devices were not recorded.
Restricted purpose – per-location and per-user limitations
Staff believed the equipment tracking process was sufficient to meet the requirement to maintain documentation showing it only provided one device per student.
Effect of Condition and Questioned Costs
Allowable activities and costs/restricted purpose – unmet need
Because the District did not have documentation supporting whether it provided eligible equipment and services to students with actual unmet need, it cannot demonstrate compliance with the program’s requirements. Given the nature of the program and circumstances, it is likely that at least some of the equipment and services the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students’ actual unmet need means that all costs are unsupported. Since we do not have a reasonable basis for estimating how much of the District’s expenditures are allowable, we are questioning all unsupported costs.
Federal regulations require the Office of the Washington State Auditor to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures.
Equipment
Without maintaining proper asset and service inventory records, as the FCC requires, the District cannot demonstrate compliance with this requirement. Because of the missing or inaccurate information, the District cannot effectively track the use of federally funded equipment and services.
Restricted purpose – per-location and per-user limitations
Because the District did not maintain accurate and complete documentation to demonstrate it did not provide more than one device and related mobile broadband services per student, it cannot demonstrate compliance with the FCC’s restrictions. Additionally, we cannot determine whether the District only provided one device per user and location.
Recommendation
We recommend the District work with the awarding 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 and services provided to students with unmet need, and maintain documentation demonstrating compliance
• Maintain inventories that include all required elements to track the use of equipment and services paid with ECF Program funds
• Monitor to confirm it provides no more than one device per student in compliance with the ECF Program’s requirements
District’s Response
Concern: The district failed to maintain sufficient documentation proving that the equipment provided to students matched their actual unmet needs. Reimbursement was sought based on estimated unmet needs rather than documented, actual unmet needs.
Response: The Mount Vernon School District mandates that students use district-assigned devices for remote learning. According to grant training provided to the district, if students are required to use district-owned devices for remote learning, Chromebooks could be distributed to any student who did not have a district-assigned device that meets hardware standards. The standards used to assess the hardware included Chromebooks that were older than four years, unable to support the necessary software and digital learning tools, and devices at their end-of-life stage, meaning they no longer received automatic updates from Google. We assessed our inventory and supplied new Chromebooks to students based on our understanding of their needs. Chromebooks were only provided to students who lacked a device that met our hardware standards.
Resolution: During this audit, the district learned that its understanding was inaccurate. However, we are confident our need exceeded our request. In May 2020, as directed by OSPI, the district conducted a survey which revealed that only 38% of our families had access to a device at home suitable for online learning. Given our students in poverty population was 4,365 during the 2022-23 school year, the 1,869 devices for which funding was requested only partially met our overall device needs. This audit has improved our understanding of the requirements related to verifying unmet needs. Moving forward, we will directly contact families and collect signatures to confirm their needs. These records will be attached to student profiles within our asset management system (Destiny) before ECF funded Chromebooks are assigned to them.
Concern: Inventory records were incomplete, missing the names of 273 students assigned laptops funded by the ECF, thus failing to fully meet FCC documentation requirements.
Response: The district acknowledges challenges related to student device assignment. Staff reductions and changes in our inventory and check-out processes necessitate updates and training, which is ongoing. We are committed to ensuring accurate and timely updates to our records.
Resolution: A list of inventory discrepancies has been distributed, and action is being taken to update our records. To strengthen our existing systems, we will implement additional biannual training sessions with our inventory managers. These trainings will cover best practices for record keeping and emphasize the importance of maintaining accurate inventory records. We will conduct monthly audits of our records, and correction requests will be sent to individual sites to promptly address any information inaccuracies.
Concern: MVSD lacked documentation to show that it only provided one device per student or location, leading to possible over-issuance of equipment.
Response: While the district acknowledges the need to improve its student assignment inventory within Destiny, we have confirmed that only one device is assigned per student through the use of our additional inventory system (Google Workspace).
Resolution: The district will enhance its inventory practices and explore additional redundancies to ensure effective contingencies if future data issues arise.
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. The State Auditor’s Office 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, the State Auditor’s Office 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 award 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.
2023-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs, equipment and restricted purpose requirements.
Assistance Listing Number and Title: 32.009, COVID-19 – Emergency Connectivity Fund Program
Federal Agency Name: Federal Communications Commission
Federal Award/Contract Number: 145233
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
Known Questioned Cost Amount: $686,278
Prior Year Audit Finding: N/A
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 2023, the District spent $686,278 in ECF Program funds to purchase laptops installed with mobile broadband services for students.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
Allowable activities and costs
ECF Program recipients may only seek reimbursement for eligible devices and services provided to students and staff with an unmet need. Recipients are prohibited from seeking reimbursement for eligible equipment and services used solely at the school or held for future use (in other words, warehousing).
Equipment
The Federal Communications Commission (FCC) requires ECF Program recipients to maintain inventories of the devices and services they have purchased with program funds. The FCC also requires inventory records to include specific elements, such as the type of equipment or service provided, equipment make/model and serial number, name of the students or employees provided the equipment or service, dates they used the equipment or service, and more.
Restricted purpose – unmet need
When submitting applications to the 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 with actual unmet need.
Restricted purpose – per-location and per-user limitations
The FCC imposed per-location and per-user limitations to maximize the use of limited funds. Under the program, eligible schools could only be reimbursed for one connected device per student with unmet need.
Description of Condition
Allowable activities and costs/restricted purpose – unmet need
The District estimated unmet need for eligible equipment and services when it applied for ECF Program funds. However, our audit found the District’s internal controls were ineffective for ensuring it documented the determination of actual unmet need and only requested reimbursement for equipment and services provided to students. Specifically, the District purchased laptops, some of which were installed with mobile broadband service, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $686,278. However, the District did not maintain documentation showing it provided each laptop paid for with program funds to a student with unmet need.
Equipment
While the District maintains asset inventories and could locate most of its purchased devices, our audit found the District’s internal controls were ineffective for ensuring its tracking documents included all required elements necessary to demonstrate compliance with federal requirements for this program. Specifically, for 273 of 1,869 laptops purchased with ECF Program funds, the District did not include names of the students provided or responsible for the equipment and related mobile broadband services and the dates they used it.
Restricted purpose – per-location and per-user limitations
Our audit found the District’s internal controls were ineffective for demonstrating it complied with the FCC’s per-location and per-user limitations. Specifically, the District did not maintain documentation showing it monitored or had a tracking process in place to ensure it only provided one device per user and location.
We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance.
Cause of Condition
Allowable activities and costs/restricted purpose – unmet need
Although District employees knew that the ECF Program award was federally funded and were aware of the requirement to request reimbursement only for actual unmet need, they thought the estimate of unmet need provided during the application process was sufficient to comply with this requirement. Additionally, they thought that since they issued devices to all students, replacing obsolescing devices would be sufficient to constitute and support unmet need for the program.
Equipment
The District’s process for checking out devices changed as part of process changes following budget cuts during the pandemic. Previously, the District had dedicated staff members to assist librarians that managed the process to check out devices to students and properly record the check-out in the District’s software. However, the responsibility fell solely on librarians when the District removed these positions. The District did not provide adequate training or oversight to ensure that during this transition, staff were properly recording the check-out of all devices when they were assigned to students, and some devices were not recorded.
Restricted purpose – per-location and per-user limitations
Staff believed the equipment tracking process was sufficient to meet the requirement to maintain documentation showing it only provided one device per student.
Effect of Condition and Questioned Costs
Allowable activities and costs/restricted purpose – unmet need
Because the District did not have documentation supporting whether it provided eligible equipment and services to students with actual unmet need, it cannot demonstrate compliance with the program’s requirements. Given the nature of the program and circumstances, it is likely that at least some of the equipment and services the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students’ actual unmet need means that all costs are unsupported. Since we do not have a reasonable basis for estimating how much of the District’s expenditures are allowable, we are questioning all unsupported costs.
Federal regulations require the Office of the Washington State Auditor to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures.
Equipment
Without maintaining proper asset and service inventory records, as the FCC requires, the District cannot demonstrate compliance with this requirement. Because of the missing or inaccurate information, the District cannot effectively track the use of federally funded equipment and services.
Restricted purpose – per-location and per-user limitations
Because the District did not maintain accurate and complete documentation to demonstrate it did not provide more than one device and related mobile broadband services per student, it cannot demonstrate compliance with the FCC’s restrictions. Additionally, we cannot determine whether the District only provided one device per user and location.
Recommendation
We recommend the District work with the awarding 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 and services provided to students with unmet need, and maintain documentation demonstrating compliance
• Maintain inventories that include all required elements to track the use of equipment and services paid with ECF Program funds
• Monitor to confirm it provides no more than one device per student in compliance with the ECF Program’s requirements
District’s Response
Concern: The district failed to maintain sufficient documentation proving that the equipment provided to students matched their actual unmet needs. Reimbursement was sought based on estimated unmet needs rather than documented, actual unmet needs.
Response: The Mount Vernon School District mandates that students use district-assigned devices for remote learning. According to grant training provided to the district, if students are required to use district-owned devices for remote learning, Chromebooks could be distributed to any student who did not have a district-assigned device that meets hardware standards. The standards used to assess the hardware included Chromebooks that were older than four years, unable to support the necessary software and digital learning tools, and devices at their end-of-life stage, meaning they no longer received automatic updates from Google. We assessed our inventory and supplied new Chromebooks to students based on our understanding of their needs. Chromebooks were only provided to students who lacked a device that met our hardware standards.
Resolution: During this audit, the district learned that its understanding was inaccurate. However, we are confident our need exceeded our request. In May 2020, as directed by OSPI, the district conducted a survey which revealed that only 38% of our families had access to a device at home suitable for online learning. Given our students in poverty population was 4,365 during the 2022-23 school year, the 1,869 devices for which funding was requested only partially met our overall device needs. This audit has improved our understanding of the requirements related to verifying unmet needs. Moving forward, we will directly contact families and collect signatures to confirm their needs. These records will be attached to student profiles within our asset management system (Destiny) before ECF funded Chromebooks are assigned to them.
Concern: Inventory records were incomplete, missing the names of 273 students assigned laptops funded by the ECF, thus failing to fully meet FCC documentation requirements.
Response: The district acknowledges challenges related to student device assignment. Staff reductions and changes in our inventory and check-out processes necessitate updates and training, which is ongoing. We are committed to ensuring accurate and timely updates to our records.
Resolution: A list of inventory discrepancies has been distributed, and action is being taken to update our records. To strengthen our existing systems, we will implement additional biannual training sessions with our inventory managers. These trainings will cover best practices for record keeping and emphasize the importance of maintaining accurate inventory records. We will conduct monthly audits of our records, and correction requests will be sent to individual sites to promptly address any information inaccuracies.
Concern: MVSD lacked documentation to show that it only provided one device per student or location, leading to possible over-issuance of equipment.
Response: While the district acknowledges the need to improve its student assignment inventory within Destiny, we have confirmed that only one device is assigned per student through the use of our additional inventory system (Google Workspace).
Resolution: The district will enhance its inventory practices and explore additional redundancies to ensure effective contingencies if future data issues arise.
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. The State Auditor’s Office 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, the State Auditor’s Office 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 award 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.