50000 - Equipment and Real Property Management (Material Weakness in Internal Control over Compliance, Material Noncompliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education (CDE) Program Name: Education Stabilization Fund Federal Financial Assistance Listing: 84.425U Award Identification Number: 15559 Award Year: 2021 Compliance Requirement: F. Equipment and Real Property Management Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.313 requires the District to maintain inventory of equipment purchased with federal awards and to conduct periodic inventory. Condition The District does not maintain an equipment listing. Cause The condition identified appears to have materialized due to the District's lack of awareness of requirements under Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.313. Effect The District currently assumes all the risk of non-compliance with requirements stated under Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.313 due to the lack of maintaining a capital asset inventory. Questioned Costs As a result of the condition identified above, a total of $720,018 in questioned costs were identified. Context/Sampling: A nonstatistical sample of four of 11 transactions were selected for testing. Repeat Finding Yes, see prior year finding 2024-004. Recommendation The District should review the requirements stated in Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.313 and implement procedures to address the deficiencies currently identified.
50000 - Reporting (Material Weakness in Internal Control over Compliance, Material Noncompliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education (CDE) Program Name: Education Stabilization Fund Federal Financial Assistance Listing: 84.425U, 84.425W Award Identification Numbers: 15559, 15566 Award Year: 2021 Compliance Requirement: L. Reporting Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria Local education agencies must comply with all reporting requirements that Section 15011 of Division B of the Coronavirus Aid, Relief, and Economic Security (CARES) Act requires that a grantee submit quarterly and annual reports. ESSER Funds awarded under the American Rescue Plan (ARP) Act of 2021 are subject to the same quarterly and annual reporting requirements. Additionally, per Title 2, Code of Federal Regulations, Part 200, Subpart D, Section 200.333, financial records and supporting documents pertinent to a Federal award must be retained for a period of three years from the date of submission of expenditure reports to the awarding agency or passthrough entity. Condition The District included encumbered expenditures in two of three quarterly reports tested. The encumbered expenditures were included in the quarterly reporting to the California Department of Education for the COVID-19 Elementary and Secondary School Emergency Relief III (ESSER III) Fund and Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Learning Loss programs, instead of only actual expenditures. In addition, the District was unable to provide financial records or supporting documents for annual report tested that agreed to the expenditures reported to the California Department of Education, or that agreed to the full-time equivalent positions required by the ESSER annual report. Cause The identified condition appears to have materialized due to misunderstanding of the reporting requirements and insufficient procedures related to the retention of financial records. Effect The District has not complied with the requirements identified in Section 15011 of Division B of the Coronavirus Aid, Relief, and Economic Security (CARES) Act or Title 2, Code of Federal Regulations, Part 200, Subpart D, Section 200.333. Questioned Costs None reported. Context/Sampling A nonstatistical sample of three of seven quarterly reports, and one of one annual reports, were tested. Repeat Finding Yes, see prior year finding 2024-005. Recommendation The District should ensure that all federal expenditure reports are supported by financial reports. These records should be maintained for a period of three years from the date of submission of the expenditure reports to the awarding agency or pass-through entity.
50000 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Material Weakness, Material Noncompliance) Federal Agency: U.S. Department of Education Pass-Through Entity: Southwest SELPA Program Name: Special Education Cluster (IDEA) Federal Financial Assistance Listing: 84.027, 84.027A, 84.173 Award Identification Numbers: 13379, 15197, 13430 Award Year: 2025 Compliance Requirements: A/B. Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria Per Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.430(g)(1), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. A semi-annual certification may be completed if 100% of an employee’s time is charged to one Federal award. In addition, per Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.403(a), costs allowed to the federal program must be necessary and reasonable for the performance of the Federal award. Condition In our sample of 40 direct charges to the program, the District was not able to provide time accounting documentation for three employees with $20,687, of which $17,247 was attributed to Assistance Listing Number 84.027 (13379) and $3,441 was attributed to Assistance Listing Number 84.173 (13430), of salaries charged to the IDEA program. In our sample of 2 journal entries allocated to the program, there was one journal entry totaling $86,688, attributed to Assistance Listing Number 84.027A (15197), where the costs that were not allowable under the IDEA Cluster because the costs did not relate to services provided to students in the IDEA program. Cause The condition identified appears to have materialized due to the District’s lack of established procedures to ensure compliance with the requirements under Title 2, Code of Federal Regulations, Part 200, Subpart E, Sections 200.430 (g)(1) and 200.403(a). Effect The District has not complied with the requirements identified in Title 2, Code of Federal Regulations, Part 200, Subpart E, Sections 200.430(g)(1) and 200.403(a). Questioned Costs As a result of the condition identified above, a total of $107,376 in questioned costs were identified. Context/Sampling: Errors were identified in two samples: 1. A nonstatistical sample of 40 transactions out of 521 total transactions were selected for testing, which accounted for $234,682 of $582,881 of federal program expenditures. 2. A nonstatistical sample of two of nine journal entries which accounted for $569,683 of $608,048 of federal program expenditures. Repeat Finding No. Recommendation The District should review the requirements stated in Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.430 (i)(1)(vii) and implement a procedure to address the control deficiency currently identified with the District’s time accounting documentation as it relates to employees working on multiple activities or cost objectives. Additionally, the District should implement review procedures to ensure only allowable costs are charged to the program.
50000 – Procurement, Suspension & Debarment (Material Weakness, Material Noncompliance) Federal Agency: U.S. Department of Education Pass-Through Entity: Southwest SELPA Program Name: Special Education Cluster (IDEA) Federal Financial Assistance Listing: 84.027, 84.027A, 84.173 Award Identification Number: 13379, 15197, 13430 Award Year: 2025 Compliance Requirements: I. Procurement, Suspension & Debarment Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria Title 2, Code of Federal Regulations, Part 180, Subpart C, Section 180.300 provides procedures that must be followed by recipients and subrecipients of Federal awards to avoid entering into covered transactions with certain parties that are debarred, suspended, or excluded from participation in Federal assistance programs. These procedures include searching for such exclusions on the System of Award Management (SAM), collecting a certification from such parties, or adding a clause or condition to the covered transaction with those parties. Additionally, Title 2, Code of Federal Regulations, Part 200 (Appendix II to Part 200) provides the provisions required to be contained in all contracts made by non-Federal entities. Condition The District does not have procedures in place to ensure compliance with required procedures identified in Title 2, Code of Federal Regulations, Part 180, Subpart C, Section 180.300, or Title 2, Code of Federal Regulations, Part 200, Appendix II to Part 200 or Title 2, Code of Federal Regulations, Part 200. The provisions covering the following were noted to be missing from the contracts reviewed: 1. Clean Air Act and Federal Water Pollution Control Act 2. Suspension and Debarment 3. Byrd Anti-Lobbying Cause The condition identified appears to have materialized due to the District's lack of awareness of requirements under Title 2, Code of Federal Regulations, Part 180, Subpart C, Section 180.300 and Title 2, Code of Federal Regulations, Part 200. Effect The District has been engaging in procurement activities without verifying if parties are suspended or debarred from participation in Federal assistance programs. The District currently assumes all the risk of non-compliance with requirements stated under Title 2, Code of Federal Regulations, Part 180, Subpart C, Section 180.300 due to the lack of implemented review and monitoring procedures. Additionally, the District has been entering into contracts that do not have all the contract provisions required under Title 2, Code of Federal Regulations, Part 200. Questioned Costs As a result of the condition identified above, a total of $329,703 in questioned costs were identified. Context/Sampling: A nonstatistical sample of three out of four contracts were selected for procurement, suspension & debarment testing. Repeat Finding No. Recommendation The District should review the requirements stated in Title 2, Code of Federal Regulations, Part 180, Subpart C, Section 180.300 and Title 2, Code of Federal Regulations, Part 200, and implement a procedure to address the deficiencies currently identified with the District's procurement process.