"See Schedule of Findings and Questioned Costs for chart/table"Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,718,246 of its ESF awards. This included $2,778,548 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,930,398 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER III) subprogram (84.425U), and $9,300 in the American Rescue Plan Elementary and Secondary School Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations establish principles and standards for determining allowable direct and indirect costs for federal awards. The Office of Superintendent of Public Instruction (OSPI) establishes the indirect cost rate for each award, and districts cannot exceed this approved rate when claiming reimbursement. If there are changes to the rate during a multi-year award, districts must adjust the amount claimed, if needed, to ensure they do not exceed the approved rate.Description of Condition Although the District?s internal controls were adequate for ensuring it materially complied with the program?s allowable activities and allowable cost requirements, it charged the incorrect indirect cost rate for its ESSER II award (84.425D). This issue was not reported as a finding in the prior audit. Cause of Condition Management and staff did not know the District needed to manually adjust its OSPI-issued unrestricted indirect cost rate for ESSER awards that covered two fiscal years. Instead, the District relied on the rate posted in the iGrants system. Effect of Condition and Questioned Costs We reviewed all indirect costs charged to the program. We found the District charged $58,892 more in indirect costs than allowable because it did not use the correct rate for its ESSER II program. We are questioning these costs. Federal regulations require the State Auditor?s Office 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 has not complied with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the District ensure it uses the correct OSPI-issued unrestricted indirect cost rate for the fiscal period when charging costs to federal awards. District?s Response The District concurs with the finding and has implemented additional internal controls around the calculation of indirect costs to address this issue. Auditor?s Remarks We appreciate the steps the District has taken to address the issue. We will review the condition during our next audit.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 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.
"See Schedule of Findings and Questioned Costs for chart/table"Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,718,246 of its ESF awards. This included $2,778,548 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,930,398 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER III) subprogram (84.425U), and $9,300 in the American Rescue Plan Elementary and Secondary School Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations establish principles and standards for determining allowable direct and indirect costs for federal awards. The Office of Superintendent of Public Instruction (OSPI) establishes the indirect cost rate for each award, and districts cannot exceed this approved rate when claiming reimbursement. If there are changes to the rate during a multi-year award, districts must adjust the amount claimed, if needed, to ensure they do not exceed the approved rate.Description of Condition Although the District?s internal controls were adequate for ensuring it materially complied with the program?s allowable activities and allowable cost requirements, it charged the incorrect indirect cost rate for its ESSER II award (84.425D). This issue was not reported as a finding in the prior audit. Cause of Condition Management and staff did not know the District needed to manually adjust its OSPI-issued unrestricted indirect cost rate for ESSER awards that covered two fiscal years. Instead, the District relied on the rate posted in the iGrants system. Effect of Condition and Questioned Costs We reviewed all indirect costs charged to the program. We found the District charged $58,892 more in indirect costs than allowable because it did not use the correct rate for its ESSER II program. We are questioning these costs. Federal regulations require the State Auditor?s Office 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 has not complied with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the District ensure it uses the correct OSPI-issued unrestricted indirect cost rate for the fiscal period when charging costs to federal awards. District?s Response The District concurs with the finding and has implemented additional internal controls around the calculation of indirect costs to address this issue. Auditor?s Remarks We appreciate the steps the District has taken to address the issue. We will review the condition during our next audit.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 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.