Finding No. 2022-005
Area: Allowable Costs/Cost Principles
Views of Auditee and Planned Corrective Action
Condition 1. Disagree with the finding.
The Education Stabilization Fund (ESF) of the Public System was awarded to and was designed to provide additional funding (supplement) support ...
Finding No. 2022-005
Area: Allowable Costs/Cost Principles
Views of Auditee and Planned Corrective Action
Condition 1. Disagree with the finding.
The Education Stabilization Fund (ESF) of the Public System was awarded to and was designed to provide additional funding (supplement) support to the local school system (PSS) as a result of the impact of the COVID-19 pandemic.
Background: On March 16, 2020 PSS suspended classroom instruction, ease central office operation to a certain level, implemented furloughs, and effectuated cost- containment initiatives, among drastic measures to mitigate the crisis brought about by the pandemic.
Of the public elementary, middle, and high schools on Saipan, Tinian, and Rota, only one school - Kagman Elementary School - was provided limited instruction (during summer of 2020). Kagman Elementary School was the first to reconfigure its facilities to maintain a safe (social distancing) facility for in-person student learning.
The $802,789 as cited (Condition 1) was an ESF-approved and sanctioned funding allocation. However, the change in funding source was initiated after the payroll processing.
And in order to reflect the correct funding source, the JE adjustment was initiated.
Due to JE limitation these entries are not reflected to “subsidiary” ledgers.
Condition 2. Disagree with the finding.
2. Retention incentive
The Public School System maintains that both the Education Stabilization Fund (ESF) and American Rescue Plan Act (ARPA) spending plans were approved by the federal grantor.
The Retention Incentive Plan in question is a component of both ESF and ARPA spending plans.
Further, an additional communication from the U.S. Department of Education affirms the PSS authority in the ESF and ARPA spending plans, including the Retention Incentive Plan in question.
Ernst and Young in its 2021 audit report (issued on April 26, 2023) on the same condition (issuance of retention incentive, see page 66) does acknowledge that “PSS sought and received prior grantor approval.”
Background: The Commissioner of Education has the sole expenditure authority vested as the chief state school superintendent to come up and produce a spending plan. As such, the Commissioner of Education proposed the funding disbursements and presented it with the State Board of Education. The BOE is the governing body of PSS.
The BOE approved the COE’s spending plan.
Condition 3. PSS agrees with the finding.
However, as of FY2023, the Federal Programs Office has instituted a stringent Standard Operating Procedure for seeking prior approval for equipment costing over $5,000.00.
Anticipated Completion Date:
N/A
Name of Contact Person and Title
Contact Person – Arlene Lizama, Director of Finance
Contact – arlene.lizama@cnmipss.org