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 Grantor Name: Federal Communications Commission
Federal Award/Contract Number: ECF202109384 ECF202109551 ECF202109553
ECF202109554
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
Known Questioned Cost Amount: $12,609
Prior Year Audit Finding: 2022-001
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 $1,077,043 in ECF Program funds to purchase laptops and broadband services 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 may only seek reimbursement for eligible devices and services provided to students and staff with 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 and school staff 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 and Wi-Fi hotspot services per student or school employee with unmet need, and no more than one fixed broadband connection per location, such as a student’s or employee’s residence.
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 and Wi-Fi hotspot services, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $1,077,043. However, the District did not maintain
documentation showing it provided each laptop and Wi-Fi hotspot services paid with program funds to a student or employee with unmet need.
Equipment
The District maintains asset inventories; however, our audit found the District’s internal controls were ineffective for ensuring it included all required elements necessary to demonstrate compliance with federal requirements. Specifically, for 48 percent of Wi-Fi hotspot services purchased with ECF Program funds, the District did not include names of the students serviced.
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 or connection per user and location.
We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance.
Cause of Condition
As communicated in the prior audit finding, the District thought the determination of unmet need provided during the application process was sufficient to comply with this requirement. Since the funding spanned two fiscal years, the District had already distributed devices and requested reimbursement before the prior audit identified this issue. The District did not take any additional action and is waiting for audit resolution from the federal grantor.
Allowable activities and costs/restricted purpose – unmet need
Although employees in the District’s Finance Department knew that another department received an ECF Program award, they said they did not know the program was federally funded and, therefore, were unaware of all its regulations. Further, they did not know about the requirement to request reimbursement only for actual unmet need, and thought the estimate of unmet need provided during the application process was sufficient to comply with this requirement.
Equipment
Due to the size and decentralized structure of the District, school staff did not consistently record student names and identification information into the district- wide asset management system.
Restricted purpose – per-location and per-user limitations
Staff said they did not know the District could not provide more than one device and/or connection per student and employee. Moreover, staff informed us that due to the wide volume of devices and Wi-Fi hotspot services that were funded by federal, state and local grants, it was not logistically feasible to establish internal controls to monitor the program specific devices students checked out throughout the school year.
Effect of Condition and Questioned Costs
Allowable activities and costs/restricted purpose – unmet need
We used statistical sampling to select and test 29 laptops and 29 Wi-Fi hotpots to determine whether the District had documentation supporting it provided eligible equipment and services to students with actual unmet needs. We noted the District could not demonstrate it fulfilled the unmet need requirement for 24 laptops and 19 Wi-Fi hotspots. Further, we identified an additional two laptops the District distributed to students that had multiple ECF-funded laptops, therefore the District did not comply with the per-location and per-user limitations requirement. Because the District did not have documentation supporting whether it provided all 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 most costs could be unsupported.
In total, we identified $12,609 of overpayments related to the purchase of 26 laptops and services for 19 Wi-Fi hotspots. Based on projection of our statistical sample, we identified an additional $846,116 of estimated overpayments.
Federal regulations require the Office of the Washington State Auditor to report known and likely 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 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 provided more than one device per student and received reimbursement for them, it did not comply with the FCC’s requirement. As noted in the allowable activities and costs section above, we are questioning the costs related to these devices.
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 and services provided to students and staff 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 and employee, and no more than one Wi-Fi hotspot service per location, in compliance with the ECF Program’s requirements.
District’s Response
The District does not concur with the audit finding or the $858,725 of questioned costs. This finding is the same as reported in the 21/22 audit. The District still contends that the costs were allowable. The issues regarding internal controls and reporting were not brought to the District’s attention until 10 months into the 22/23 audit period, leaving no time for discussion or changes in interpretation and process.
The audit’s condition states that our internal controls were ineffective for ensuring we requested reimbursement only for students and staff with a documented unmet need and that our internal controls were ineffective for demonstrating per location and per user limitations. Based on guidance from the Federal Communications Commission (excerpted below), the District contends we have spent all funds for allowable costs, that those costs were reasonable and necessary, and for students and staff with unmet needs.
Districts were able to determine whether students and staff had unmet needs. For our district this meant addressing instances where students may have shared a home device with other siblings; student or staff devices were too old or slow to function properly when running multiple required applications; and / or student owned devices did not have the appropriate security in place to protect students during remote learning (especially from unauthorized websites). Home drives, where all educational digital resources were stored, couldn’t be accessed unless using a district issued device. Additionally, the district’s technical support could not access personally owned devices to provide for thousands of trouble tickets and support issues students faced during remote learning.
Based on these factors, unmet need was defined broadly, but within allowed parameters and inventory records were kept, albeit, not perfectly.
Devices for remote learning could also be used at school. During the pandemic in Washington State we experienced times when classrooms, schools and or districts were closed by the health department and state regulations because of outbreaks. Districts had to be prepared to support remote learning each day with constantly changing guidance on who was allowed to be in person.
Seattle Public Schools followed guidance from the Federal Communications Commission outlined in a document titled: “Emergency Connectivity Fund Common Misconceptions”,
“Misconception #2: If schools have returned to in-class instruction for the upcoming school year, they are not eligible to participate.
Answer: This is false. Equipment and services provided to students or school staff who would otherwise lack sufficient access to connected devices, and/or broadband internet access connection while off campus is eligible for Emergency Connectivity Fund Support.”
Additionally, from the Federal Communications Commission Order FCC-CIRC21-93-043021, question 77: “We think schools are in the best position to determine whether their students and staff have devices and broadband services sufficient to meet their remote learning needs, and we recognize that they are making such decisions in the midst of a pandemic. We, therefore, will not impose any specific metrics or process requirements on those determinations.” And from question 51: “…we are sensitive to the need to provide some flexibility during this uncertain time. If those connected devices were purchased for the purpose of providing students…with devices for off-campus use consistent with the rules we adopt today, we will not prohibit such on-campus use.”
Finally, SAO did not apply any reasonable measure to reduce questioned costs but did state they know that at least some of the equipment addressed unmet needs, while still choosing to question all costs. That is clearly out of alignment with the FCC guidance.
There are no corrective actions to take at this time as the funding source has been exhausted and the timeline has passed.
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 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.
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 Grantor Name: Federal Communications Commission
Federal Award/Contract Number: ECF202109384 ECF202109551 ECF202109553
ECF202109554
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
Known Questioned Cost Amount: $12,609
Prior Year Audit Finding: 2022-001
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 $1,077,043 in ECF Program funds to purchase laptops and broadband services 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 may only seek reimbursement for eligible devices and services provided to students and staff with 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 and school staff 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 and Wi-Fi hotspot services per student or school employee with unmet need, and no more than one fixed broadband connection per location, such as a student’s or employee’s residence.
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 and Wi-Fi hotspot services, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $1,077,043. However, the District did not maintain
documentation showing it provided each laptop and Wi-Fi hotspot services paid with program funds to a student or employee with unmet need.
Equipment
The District maintains asset inventories; however, our audit found the District’s internal controls were ineffective for ensuring it included all required elements necessary to demonstrate compliance with federal requirements. Specifically, for 48 percent of Wi-Fi hotspot services purchased with ECF Program funds, the District did not include names of the students serviced.
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 or connection per user and location.
We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance.
Cause of Condition
As communicated in the prior audit finding, the District thought the determination of unmet need provided during the application process was sufficient to comply with this requirement. Since the funding spanned two fiscal years, the District had already distributed devices and requested reimbursement before the prior audit identified this issue. The District did not take any additional action and is waiting for audit resolution from the federal grantor.
Allowable activities and costs/restricted purpose – unmet need
Although employees in the District’s Finance Department knew that another department received an ECF Program award, they said they did not know the program was federally funded and, therefore, were unaware of all its regulations. Further, they did not know about the requirement to request reimbursement only for actual unmet need, and thought the estimate of unmet need provided during the application process was sufficient to comply with this requirement.
Equipment
Due to the size and decentralized structure of the District, school staff did not consistently record student names and identification information into the district- wide asset management system.
Restricted purpose – per-location and per-user limitations
Staff said they did not know the District could not provide more than one device and/or connection per student and employee. Moreover, staff informed us that due to the wide volume of devices and Wi-Fi hotspot services that were funded by federal, state and local grants, it was not logistically feasible to establish internal controls to monitor the program specific devices students checked out throughout the school year.
Effect of Condition and Questioned Costs
Allowable activities and costs/restricted purpose – unmet need
We used statistical sampling to select and test 29 laptops and 29 Wi-Fi hotpots to determine whether the District had documentation supporting it provided eligible equipment and services to students with actual unmet needs. We noted the District could not demonstrate it fulfilled the unmet need requirement for 24 laptops and 19 Wi-Fi hotspots. Further, we identified an additional two laptops the District distributed to students that had multiple ECF-funded laptops, therefore the District did not comply with the per-location and per-user limitations requirement. Because the District did not have documentation supporting whether it provided all 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 most costs could be unsupported.
In total, we identified $12,609 of overpayments related to the purchase of 26 laptops and services for 19 Wi-Fi hotspots. Based on projection of our statistical sample, we identified an additional $846,116 of estimated overpayments.
Federal regulations require the Office of the Washington State Auditor to report known and likely 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 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 provided more than one device per student and received reimbursement for them, it did not comply with the FCC’s requirement. As noted in the allowable activities and costs section above, we are questioning the costs related to these devices.
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 and services provided to students and staff 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 and employee, and no more than one Wi-Fi hotspot service per location, in compliance with the ECF Program’s requirements.
District’s Response
The District does not concur with the audit finding or the $858,725 of questioned costs. This finding is the same as reported in the 21/22 audit. The District still contends that the costs were allowable. The issues regarding internal controls and reporting were not brought to the District’s attention until 10 months into the 22/23 audit period, leaving no time for discussion or changes in interpretation and process.
The audit’s condition states that our internal controls were ineffective for ensuring we requested reimbursement only for students and staff with a documented unmet need and that our internal controls were ineffective for demonstrating per location and per user limitations. Based on guidance from the Federal Communications Commission (excerpted below), the District contends we have spent all funds for allowable costs, that those costs were reasonable and necessary, and for students and staff with unmet needs.
Districts were able to determine whether students and staff had unmet needs. For our district this meant addressing instances where students may have shared a home device with other siblings; student or staff devices were too old or slow to function properly when running multiple required applications; and / or student owned devices did not have the appropriate security in place to protect students during remote learning (especially from unauthorized websites). Home drives, where all educational digital resources were stored, couldn’t be accessed unless using a district issued device. Additionally, the district’s technical support could not access personally owned devices to provide for thousands of trouble tickets and support issues students faced during remote learning.
Based on these factors, unmet need was defined broadly, but within allowed parameters and inventory records were kept, albeit, not perfectly.
Devices for remote learning could also be used at school. During the pandemic in Washington State we experienced times when classrooms, schools and or districts were closed by the health department and state regulations because of outbreaks. Districts had to be prepared to support remote learning each day with constantly changing guidance on who was allowed to be in person.
Seattle Public Schools followed guidance from the Federal Communications Commission outlined in a document titled: “Emergency Connectivity Fund Common Misconceptions”,
“Misconception #2: If schools have returned to in-class instruction for the upcoming school year, they are not eligible to participate.
Answer: This is false. Equipment and services provided to students or school staff who would otherwise lack sufficient access to connected devices, and/or broadband internet access connection while off campus is eligible for Emergency Connectivity Fund Support.”
Additionally, from the Federal Communications Commission Order FCC-CIRC21-93-043021, question 77: “We think schools are in the best position to determine whether their students and staff have devices and broadband services sufficient to meet their remote learning needs, and we recognize that they are making such decisions in the midst of a pandemic. We, therefore, will not impose any specific metrics or process requirements on those determinations.” And from question 51: “…we are sensitive to the need to provide some flexibility during this uncertain time. If those connected devices were purchased for the purpose of providing students…with devices for off-campus use consistent with the rules we adopt today, we will not prohibit such on-campus use.”
Finally, SAO did not apply any reasonable measure to reduce questioned costs but did state they know that at least some of the equipment addressed unmet needs, while still choosing to question all costs. That is clearly out of alignment with the FCC guidance.
There are no corrective actions to take at this time as the funding source has been exhausted and the timeline has passed.
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 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.