Finding Number: 2024-008 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: U.S. Department of Education Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2023-006 Noncompliance and Material Weakness- Schedule of Expenditures of Federal Awards 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 CFR 200.403(b) which requires, in part, except where otherwise authorized by statute, costs must conform to any limitations or exclusions set forth in 2 CFR Part 200 Subpart E or in the Federal award as to types or amount of cost items in order to be allowable under Federal awards. Further, Section 313(3) of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021, includes additional allowable uses of funds under ESSER II. The District was awarded $1,448,106 in COVID-19 Elementary and Secondary School Emergency Relief Fund (ESSER II) grant funding (AL #84.425D) in 2022 and 2023 by the Ohio Department of Education and Workforce. Section 2001 of the American Rescue Plan (ARP) Act, includes additional allowable uses of funds under ARP ESSER. The District was awarded $3,254,550 of COVID-19 American Rescue Plan Elementary and Secondary School Emergency Relief Fund (ARP ESSER) grant funding (AL #84.425U) in 2022 through 2024 by the Ohio Department of Education and Workforce. The District maintained Education Stabilization Fund (AL# 84.425) activity in a separate fund to allow for accountability of federal expenditures. However, the District posted expenditures to this fund in excess of available Education Stabilization Fund funding of $798,317 pertaining to ARP ESSER and $78,861 pertaining to Esser II. As such, the internal controls relating to monitoring the fund and transactions to ensure reasonable assurance that the charges were accurate were not operating effectively. The lack of effective controls resulted in overspending of the grant and overstatement of expenditures on the Schedule of Expenditures of Federal Awards. Noncompliance with grant requirements could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. District management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements. The District should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the District is in compliance with grant requirements and major federal programs are accurately identified for audit. The District spending more grant funding than was awarded also resulted in adjustments to the financial statements to move the expenditures in excess of the grant award to the General Fund as reported in Finding 2024-007. See Finding 2024-007 in Section 2 above. The District spending more grant funding than was awarded also contributed to errors in the Final Expenditure reports submitted to the grantor. See Finding 2024-010 below.
Finding Number: 2024-009 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: U.S. Department of Education Compliance Requirement: Equipment And Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2023-008 Noncompliance and Material Weakness- Physical Inventories 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. §200.313(d)(2), which states, a physical inventory of the property must be taken and the results reconciled with the property records at least once every 2 years. Due to a failure of internal controls, there was no indication that a physical inventory of the property acquired under the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER), AL number 84.425U had been performed within the preceding two years. Further, the District did not maintain a listing of capital assets purchased using this grant fund. Physical inventories should be performed, at a minimum, once every two years to verify that assets held per the capital asset listing actually exist. This will help detect errors, fraud, theft, or omissions.
Finding Number: 2024-010 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: U.S. Department of Education Compliance Requirement: Reporting Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2023-010 Noncompliance and Material Weakness- Final Expenditure Reporting 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.328 which provides the Federal awarding agency may solicit only the standard, OMB-approved government wide data elements for collection of financial information. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Ohio Department of Education Grants Manual requires, at the end of the grant period, that entities submit a final expenditure report (FER). A FER must be submitted to show how grant funds were expended during the grant period. The amounts by object code submitted by the District in the Final Expenditure Report for the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER, AL # 84.425U), grant year 2024, varied from the underlying system data. Expenditures on the Final Expenditure report, object code 500 were under-reported $9,080, and object code 600 were under-reported $29,346. This variance was due to improper monitoring. The failure to properly report expenditures to the grantor can result in corrective action taken by the grantor and obfuscates the true nature of the grant’s use. The Treasurer should review the annual Final Expenditure Reports and verify the correct information is provided to the grantor. This information should be reconciled to the underlying system reports. Material Weakness and Noncompliance documented in Federal Finding 2024-008 in Section 3 above pertaining to ESSER funding contributed to the reporting error.