2022-001 The District did not have adequate internal controls over 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: ECF202109243 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: 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 2022, the District spent $300,078 in ECF Program funds to purchase laptops and tablet computers for students and school staff. 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 (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 Allowable activities and costs/restricted purpose ? unmet need The District estimated unmet need for eligible equipment 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 for school staff and only requested reimbursement for equipment provided to those employees. Specifically, the District purchased laptops and tablet computers, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $300,078. However, the District did not maintain documentation showing it provided each device paid for with program funds to an employee with unmet need. In addition, two devices were warehoused for future use which is not an allowable program activity. We consider this deficiency in internal controls to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition Allowable activities and costs/restricted purpose ? unmet need District employees did not document unmet need requirements for all laptops and tablet computers purchased under this award. District employees who were authorized to review and sign the funding application and the reimbursement request documented the unmet needs for laptops and tablet computers provided to students, but they did not document the unmet needs for school staff who received these devices. Additionally, key staff were unaware that warehousing devices for future use was not an allowable program activity. 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 to school staff with actual unmet need, it cannot demonstrate compliance with the program?s requirements. Our audit found 50 ECF-funded devices, which totaled $15,917, were distributed to staff who did not have a documented unmet need. Given the nature of the program and the circumstances, it is likely that at least some of the equipment the District purchased for staff and charged to the award addressed unmet needs. However, the lack of a documented assessment of staff?s actual unmet need means that these costs are unsupported. Additionally, two devices, which totaled $637, were warehoused for future use, which is not an allowable program activity. 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 staff with unmet need, and maintain documentation demonstrating compliance. District?s Response Omak School District believes in transparency and accountability for our public?s assets. We believe in creating educational opportunities that allow all of our students to thrive. During the pandemic, we were forced to operate in new and unique ways to make these opportunities available to our students. The Emergency Connectivity Fund (ECF) Program helped us to purchase equipment deemed adequate for our students to equitably participate in remote learning. In evaluating the remote learning needs of our students, the District made the determination that personal home computers were not adequate. These assertions were documented when we applied for the ECF Program funding and when we made claims for reimbursement to the FCC using their forms. While it was not made clear by the FCC that additional documentation was needed, we acknowledge that, for audit purposes, additional documentation helps auditors confirm that our determinations met FCC requirements. Moving forward, the District will ensure that we meet all FCC requirements related to the ECF Program prior to requesting funding. We would like to thank the Washington State Auditor?s Office for their careful evaluation of this program given the lack of clear and timely guidance provided to all recipients of these funds by the FCC. 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.
2022-001 The District did not have adequate internal controls over 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: ECF202109243 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: 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 2022, the District spent $300,078 in ECF Program funds to purchase laptops and tablet computers for students and school staff. 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 (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 Allowable activities and costs/restricted purpose ? unmet need The District estimated unmet need for eligible equipment 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 for school staff and only requested reimbursement for equipment provided to those employees. Specifically, the District purchased laptops and tablet computers, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $300,078. However, the District did not maintain documentation showing it provided each device paid for with program funds to an employee with unmet need. In addition, two devices were warehoused for future use which is not an allowable program activity. We consider this deficiency in internal controls to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition Allowable activities and costs/restricted purpose ? unmet need District employees did not document unmet need requirements for all laptops and tablet computers purchased under this award. District employees who were authorized to review and sign the funding application and the reimbursement request documented the unmet needs for laptops and tablet computers provided to students, but they did not document the unmet needs for school staff who received these devices. Additionally, key staff were unaware that warehousing devices for future use was not an allowable program activity. 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 to school staff with actual unmet need, it cannot demonstrate compliance with the program?s requirements. Our audit found 50 ECF-funded devices, which totaled $15,917, were distributed to staff who did not have a documented unmet need. Given the nature of the program and the circumstances, it is likely that at least some of the equipment the District purchased for staff and charged to the award addressed unmet needs. However, the lack of a documented assessment of staff?s actual unmet need means that these costs are unsupported. Additionally, two devices, which totaled $637, were warehoused for future use, which is not an allowable program activity. 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 staff with unmet need, and maintain documentation demonstrating compliance. District?s Response Omak School District believes in transparency and accountability for our public?s assets. We believe in creating educational opportunities that allow all of our students to thrive. During the pandemic, we were forced to operate in new and unique ways to make these opportunities available to our students. The Emergency Connectivity Fund (ECF) Program helped us to purchase equipment deemed adequate for our students to equitably participate in remote learning. In evaluating the remote learning needs of our students, the District made the determination that personal home computers were not adequate. These assertions were documented when we applied for the ECF Program funding and when we made claims for reimbursement to the FCC using their forms. While it was not made clear by the FCC that additional documentation was needed, we acknowledge that, for audit purposes, additional documentation helps auditors confirm that our determinations met FCC requirements. Moving forward, the District will ensure that we meet all FCC requirements related to the ECF Program prior to requesting funding. We would like to thank the Washington State Auditor?s Office for their careful evaluation of this program given the lack of clear and timely guidance provided to all recipients of these funds by the FCC. 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.