2025-002 Type: Significant Deficiency in Internal Control / Noncompliance Program: Child Nutrition Cluster Condition: The District charged to the food service fund the cost of an asset that was not included on the approved equipment list from Michigan Department of Education and did not obtain approval from Michigan Department of Education prior to purchase. Criteria: As detailed in 2 CFR 200.439(b)(1), “Capital expenditures for general purpose equipment, buildings, and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity.” Cause: Management oversight. Effect: Amounts charged to the food service fund may be considered unallowed. Context: The District charged the cost of the loading dock to the food service fund. Questioned Costs: Amount charged to the food service fund is below $25,000. Recommendation: We recommend that the District review/update procedures to ensure that equipment purchased from the food service fund is either on the approved equipment list, or approval from Michigan Department of Education has been obtained prior to purchase. Management’s Resp: We are in agreement with this finding.
Finding Number: 2024-004 Finding Title: Internal Controls and Compliance Over Federally Funded Equipment Compliance Requirement(s): Equipment and Real Property Management Classification: Significant Deficiency Programs: Port Security Grant Program ALN #: 97.056 Pass-through entity: N/A – Direct Award Federal Agency: Department of Homeland Security Federal Award Numbers: EMW-2021-PU-00463-S01 Federal Award Year: 2021 Criteria or specific requirement (including statutory, regulatory, or other citation § 200.313 Equipment. See also § 200.439. (a) Title. Title to equipment acquired under the Federal award will vest upon acquisition in the recipient or subrecipient subject to the conditions of this section. This title must be a conditional title unless a Federal statute specifically authorizes the Federal agency to vest title in the recipient or subrecipient without further responsibility to the Federal Government (and the Federal agency elects to do so). A conditional title means a clear title is withheld by the Federal agency until conditions and requirements specified in the terms and conditions of a Federal award have been fulfilled. Title for equipment vested in a recipient or subrecipient is subject to the following conditions: (1) Use the equipment for the authorized purposes of the project during the period of performance or until the property is no longer needed for the purposes of the project. (2) While the equipment is being used for the originally authorized purpose, the recipient or subrecipient must not dispose of or encumber its title or other interests without the approval of the Federal agency or pass-through entity. (3) Use and dispose of the property in accordance with paragraphs (b), (c), and (e) of this section. (b) General. A State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. Indian Tribes must use, manage, and dispose of equipment acquired under a Federal award in accordance with tribal laws and procedures. If such laws and procedures do not exist, Indian Tribes must follow the guidance in this section. Other recipients and subrecipients, including subrecipients of a State or Indian Tribe, must follow paragraphs (c) through (e) of this section. (c) Use. (1) The recipient or subrecipient must use equipment for the project or program for which it was acquired and for as long as needed, whether or not the project or program continues to be supported by the Federal award. The recipient or subrecipient must not encumber the equipment without prior approval of the Federal agency or pass-through entity. The Federal agency may require the submission of the applicable common forms for reporting on equipment. When no longer needed for the original project or program, the equipment may be used in other activities in the following order of priority: (i) Activities under other Federal awards from the Federal agency that funded the original program or project; then (ii) Activities under Federal awards from other Federal agencies. These activities include consolidated equipment for information technology systems. (2) During the time that equipment is used on the project or program for which it was acquired, the recipient or subrecipient must also make the equipment available for use on other programs or projects supported by the Federal Government, provided that such use will not interfere with the purpose for which it was originally acquired. First preference for other use of the equipment must be given to other programs or projects supported by the Federal agency that financed the equipment. Second preference must be given to programs or projects under Federal awards from other Federal agencies. Use for non-federally funded projects is also permissible, provided such use will not interfere with the purpose for which it was originally acquired. The recipient or subrecipient should consider charging user fees as appropriate. (3) Notwithstanding the encouragement in § 200.307 to earn program income, the recipient or subrecipient must not use equipment acquired with the Federal award to provide services for a fee that is less than a private company would charge for similar services unless specifically authorized by Federal statute. This restriction is effective as long as the Federal Government retains an interest in the equipment. (4) When acquiring replacement equipment, the recipient or subrecipient may either trade-in or sell the equipment and use the proceeds to offset the cost of the replacement equipment. (d) Management requirements. Regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. (e) Disposition. When equipment acquired under a Federal award is no longer needed for the original project, program, or for other activities currently or previously supported by a Federal agency, the recipient or subrecipient must request disposition instructions from the Federal agency or pass-through entity if required by the terms and conditions of the Federal award. Disposition of the equipment will be made as follows, in accordance with Federal agency or pass-through entity disposition instructions: (1) Equipment with a current fair market value of $10,000 or less (per unit) may be retained, sold, or otherwise disposed of with no further responsibility to the Federal agency or pass-through entity. (2) Except as provided in § 200.312(b), or if the Federal agency or pass-through entity fails to provide requested disposition instructions within 120 days, items of equipment with a current fair market value in excess of $10,000 (per-unit) may be retained or sold by the recipient or subrecipient. However, the Federal agency is entitled to an amount calculated by multiplying the percentage of the Federal agency's contribution towards the original purchase by the current market value or proceeds from the sale. If the equipment is sold, the Federal agency or pass-through entity may permit the recipient or subrecipient to retain, from the Federal share, $1,000 of the proceeds to cover expenses associated with the selling and handling of the equipment. (3) The recipient or subrecipient may transfer title to the property to the Federal Government or to an eligible third party provided that the recipient or subrecipient must be entitled to compensation for its attributable percentage of the current fair market value of the property. (4) In cases where a recipient or subrecipient fails to take appropriate disposition actions, the Federal agency or pass-through entity may direct the recipient or subrecipient to take disposition actions. Condition As part of our audit procedures, we reviewed internal controls over inventory and asset management, including physical inspection and disposition tracking of equipment. For the Fire Department, we determined that no physical inventory of federally funded equipment had been conducted during the required biennial period, and no reconciliation of equipment records to actual assets had been performed. While informal tracking logs and asset purchase records existed, they were incomplete and lacked standardized documentation of asset tag numbers, inspection dates, asset condition, and verification signatures. Moreover, there was no evidence of centralized or departmental oversight to ensure routine physical inventory and compliance with Federal property standards. In addition, we identified the Harbor department failed to properly record the disposition of a federally funded asset. The asset was still marked as “in service” within the equipment listing provided to us during the audit; however the item had in fact been disposed of during the audit period. Cause The Fire Department’s grants team oversees the compliance with required federal equipment procedures, the grants team indicated capacity issues were the main contributor towards the lack of a reconciliation or inventorying of the equipment. The Harbor Departments property related to a vehicle which was disposed of after an accident. This occurred between the departments inventory processes leading to the listing not being updated by mistake. Effect or potential effect The Departments were out of compliance with federal requirements surrounding equipment management, maintenance, and disposal. Questioned costs None Context The Harbor Department special vehicle which had an estimated book value of $0 that was involved in a collision before being disposed of. There were $0 in proceeds received related to the disposal. Identification as a repeat finding if applicable N/A Recommendation We recommend the departments enhance internal controls to ensure its property records include all the requirements under the Uniform Guidance and properly identify all property and equipment purchased with federal funds. We recommend the Fire Department implement a plan to address staffing needs and formalize procedures regarding the reconciliation, tracking, and maintenance of federally funded equipment. We recommend the Harbor Department enhance their procedures on equipment disposals. Views of responsible officials and planned corrective actions The Fire Department will ensure that all grant funds are expended in compliance with grant guidelines, including the completion of a biennial Equipment Inventory and the submission of a certification letter verifying its accuracy to the grantor every other year. Effective June 16, 2025, the Fire Department will conduct an Equipment Inventory and submit a verification letter to the grantor confirming its completion on a biennial basis. The current Equipment Inventory will be completed by the Support Services Bureau by September 30, 2025. The Fire Department will ensure the accompanying verification letter is sent to the grantor along with the updated inventory list. This biennial requirement will be integrated into the Department’s annual calendar. Following the FY2025 inventory, the next cycle will occur in FY2027 and continue in every odd-numbered fiscal year thereafter. The Harbor Department will enhance its written procedures on equipment disposals and provide training to appropriate Finance, Security, and Maintenance Division staff in FY 2025 to ensure compliance and timeliness in following equipment disposal procedures.
Finding Number: 2024-004 Finding Title: Internal Controls and Compliance Over Federally Funded Equipment Compliance Requirement(s): Equipment and Real Property Management Classification: Significant Deficiency Programs: Port Security Grant Program ALN #: 97.056 Pass-through entity: N/A – Direct Award Federal Agency: Department of Homeland Security Federal Award Numbers: EMW-2021-PU-00463-S01 Federal Award Year: 2021 Criteria or specific requirement (including statutory, regulatory, or other citation § 200.313 Equipment. See also § 200.439. (a) Title. Title to equipment acquired under the Federal award will vest upon acquisition in the recipient or subrecipient subject to the conditions of this section. This title must be a conditional title unless a Federal statute specifically authorizes the Federal agency to vest title in the recipient or subrecipient without further responsibility to the Federal Government (and the Federal agency elects to do so). A conditional title means a clear title is withheld by the Federal agency until conditions and requirements specified in the terms and conditions of a Federal award have been fulfilled. Title for equipment vested in a recipient or subrecipient is subject to the following conditions: (1) Use the equipment for the authorized purposes of the project during the period of performance or until the property is no longer needed for the purposes of the project. (2) While the equipment is being used for the originally authorized purpose, the recipient or subrecipient must not dispose of or encumber its title or other interests without the approval of the Federal agency or pass-through entity. (3) Use and dispose of the property in accordance with paragraphs (b), (c), and (e) of this section. (b) General. A State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. Indian Tribes must use, manage, and dispose of equipment acquired under a Federal award in accordance with tribal laws and procedures. If such laws and procedures do not exist, Indian Tribes must follow the guidance in this section. Other recipients and subrecipients, including subrecipients of a State or Indian Tribe, must follow paragraphs (c) through (e) of this section. (c) Use. (1) The recipient or subrecipient must use equipment for the project or program for which it was acquired and for as long as needed, whether or not the project or program continues to be supported by the Federal award. The recipient or subrecipient must not encumber the equipment without prior approval of the Federal agency or pass-through entity. The Federal agency may require the submission of the applicable common forms for reporting on equipment. When no longer needed for the original project or program, the equipment may be used in other activities in the following order of priority: (i) Activities under other Federal awards from the Federal agency that funded the original program or project; then (ii) Activities under Federal awards from other Federal agencies. These activities include consolidated equipment for information technology systems. (2) During the time that equipment is used on the project or program for which it was acquired, the recipient or subrecipient must also make the equipment available for use on other programs or projects supported by the Federal Government, provided that such use will not interfere with the purpose for which it was originally acquired. First preference for other use of the equipment must be given to other programs or projects supported by the Federal agency that financed the equipment. Second preference must be given to programs or projects under Federal awards from other Federal agencies. Use for non-federally funded projects is also permissible, provided such use will not interfere with the purpose for which it was originally acquired. The recipient or subrecipient should consider charging user fees as appropriate. (3) Notwithstanding the encouragement in § 200.307 to earn program income, the recipient or subrecipient must not use equipment acquired with the Federal award to provide services for a fee that is less than a private company would charge for similar services unless specifically authorized by Federal statute. This restriction is effective as long as the Federal Government retains an interest in the equipment. (4) When acquiring replacement equipment, the recipient or subrecipient may either trade-in or sell the equipment and use the proceeds to offset the cost of the replacement equipment. (d) Management requirements. Regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. (e) Disposition. When equipment acquired under a Federal award is no longer needed for the original project, program, or for other activities currently or previously supported by a Federal agency, the recipient or subrecipient must request disposition instructions from the Federal agency or pass-through entity if required by the terms and conditions of the Federal award. Disposition of the equipment will be made as follows, in accordance with Federal agency or pass-through entity disposition instructions: (1) Equipment with a current fair market value of $10,000 or less (per unit) may be retained, sold, or otherwise disposed of with no further responsibility to the Federal agency or pass-through entity. (2) Except as provided in § 200.312(b), or if the Federal agency or pass-through entity fails to provide requested disposition instructions within 120 days, items of equipment with a current fair market value in excess of $10,000 (per-unit) may be retained or sold by the recipient or subrecipient. However, the Federal agency is entitled to an amount calculated by multiplying the percentage of the Federal agency's contribution towards the original purchase by the current market value or proceeds from the sale. If the equipment is sold, the Federal agency or pass-through entity may permit the recipient or subrecipient to retain, from the Federal share, $1,000 of the proceeds to cover expenses associated with the selling and handling of the equipment. (3) The recipient or subrecipient may transfer title to the property to the Federal Government or to an eligible third party provided that the recipient or subrecipient must be entitled to compensation for its attributable percentage of the current fair market value of the property. (4) In cases where a recipient or subrecipient fails to take appropriate disposition actions, the Federal agency or pass-through entity may direct the recipient or subrecipient to take disposition actions. Condition As part of our audit procedures, we reviewed internal controls over inventory and asset management, including physical inspection and disposition tracking of equipment. For the Fire Department, we determined that no physical inventory of federally funded equipment had been conducted during the required biennial period, and no reconciliation of equipment records to actual assets had been performed. While informal tracking logs and asset purchase records existed, they were incomplete and lacked standardized documentation of asset tag numbers, inspection dates, asset condition, and verification signatures. Moreover, there was no evidence of centralized or departmental oversight to ensure routine physical inventory and compliance with Federal property standards. In addition, we identified the Harbor department failed to properly record the disposition of a federally funded asset. The asset was still marked as “in service” within the equipment listing provided to us during the audit; however the item had in fact been disposed of during the audit period. Cause The Fire Department’s grants team oversees the compliance with required federal equipment procedures, the grants team indicated capacity issues were the main contributor towards the lack of a reconciliation or inventorying of the equipment. The Harbor Departments property related to a vehicle which was disposed of after an accident. This occurred between the departments inventory processes leading to the listing not being updated by mistake. Effect or potential effect The Departments were out of compliance with federal requirements surrounding equipment management, maintenance, and disposal. Questioned costs None Context The Harbor Department special vehicle which had an estimated book value of $0 that was involved in a collision before being disposed of. There were $0 in proceeds received related to the disposal. Identification as a repeat finding if applicable N/A Recommendation We recommend the departments enhance internal controls to ensure its property records include all the requirements under the Uniform Guidance and properly identify all property and equipment purchased with federal funds. We recommend the Fire Department implement a plan to address staffing needs and formalize procedures regarding the reconciliation, tracking, and maintenance of federally funded equipment. We recommend the Harbor Department enhance their procedures on equipment disposals. Views of responsible officials and planned corrective actions The Fire Department will ensure that all grant funds are expended in compliance with grant guidelines, including the completion of a biennial Equipment Inventory and the submission of a certification letter verifying its accuracy to the grantor every other year. Effective June 16, 2025, the Fire Department will conduct an Equipment Inventory and submit a verification letter to the grantor confirming its completion on a biennial basis. The current Equipment Inventory will be completed by the Support Services Bureau by September 30, 2025. The Fire Department will ensure the accompanying verification letter is sent to the grantor along with the updated inventory list. This biennial requirement will be integrated into the Department’s annual calendar. Following the FY2025 inventory, the next cycle will occur in FY2027 and continue in every odd-numbered fiscal year thereafter. The Harbor Department will enhance its written procedures on equipment disposals and provide training to appropriate Finance, Security, and Maintenance Division staff in FY 2025 to ensure compliance and timeliness in following equipment disposal procedures.
Finding Number: 2024-004 Finding Title: Internal Controls and Compliance Over Federally Funded Equipment Compliance Requirement(s): Equipment and Real Property Management Classification: Significant Deficiency Programs: Port Security Grant Program ALN #: 97.056 Pass-through entity: N/A – Direct Award Federal Agency: Department of Homeland Security Federal Award Numbers: EMW-2021-PU-00463-S01 Federal Award Year: 2021 Criteria or specific requirement (including statutory, regulatory, or other citation § 200.313 Equipment. See also § 200.439. (a) Title. Title to equipment acquired under the Federal award will vest upon acquisition in the recipient or subrecipient subject to the conditions of this section. This title must be a conditional title unless a Federal statute specifically authorizes the Federal agency to vest title in the recipient or subrecipient without further responsibility to the Federal Government (and the Federal agency elects to do so). A conditional title means a clear title is withheld by the Federal agency until conditions and requirements specified in the terms and conditions of a Federal award have been fulfilled. Title for equipment vested in a recipient or subrecipient is subject to the following conditions: (1) Use the equipment for the authorized purposes of the project during the period of performance or until the property is no longer needed for the purposes of the project. (2) While the equipment is being used for the originally authorized purpose, the recipient or subrecipient must not dispose of or encumber its title or other interests without the approval of the Federal agency or pass-through entity. (3) Use and dispose of the property in accordance with paragraphs (b), (c), and (e) of this section. (b) General. A State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. Indian Tribes must use, manage, and dispose of equipment acquired under a Federal award in accordance with tribal laws and procedures. If such laws and procedures do not exist, Indian Tribes must follow the guidance in this section. Other recipients and subrecipients, including subrecipients of a State or Indian Tribe, must follow paragraphs (c) through (e) of this section. (c) Use. (1) The recipient or subrecipient must use equipment for the project or program for which it was acquired and for as long as needed, whether or not the project or program continues to be supported by the Federal award. The recipient or subrecipient must not encumber the equipment without prior approval of the Federal agency or pass-through entity. The Federal agency may require the submission of the applicable common forms for reporting on equipment. When no longer needed for the original project or program, the equipment may be used in other activities in the following order of priority: (i) Activities under other Federal awards from the Federal agency that funded the original program or project; then (ii) Activities under Federal awards from other Federal agencies. These activities include consolidated equipment for information technology systems. (2) During the time that equipment is used on the project or program for which it was acquired, the recipient or subrecipient must also make the equipment available for use on other programs or projects supported by the Federal Government, provided that such use will not interfere with the purpose for which it was originally acquired. First preference for other use of the equipment must be given to other programs or projects supported by the Federal agency that financed the equipment. Second preference must be given to programs or projects under Federal awards from other Federal agencies. Use for non-federally funded projects is also permissible, provided such use will not interfere with the purpose for which it was originally acquired. The recipient or subrecipient should consider charging user fees as appropriate. (3) Notwithstanding the encouragement in § 200.307 to earn program income, the recipient or subrecipient must not use equipment acquired with the Federal award to provide services for a fee that is less than a private company would charge for similar services unless specifically authorized by Federal statute. This restriction is effective as long as the Federal Government retains an interest in the equipment. (4) When acquiring replacement equipment, the recipient or subrecipient may either trade-in or sell the equipment and use the proceeds to offset the cost of the replacement equipment. (d) Management requirements. Regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. (e) Disposition. When equipment acquired under a Federal award is no longer needed for the original project, program, or for other activities currently or previously supported by a Federal agency, the recipient or subrecipient must request disposition instructions from the Federal agency or pass-through entity if required by the terms and conditions of the Federal award. Disposition of the equipment will be made as follows, in accordance with Federal agency or pass-through entity disposition instructions: (1) Equipment with a current fair market value of $10,000 or less (per unit) may be retained, sold, or otherwise disposed of with no further responsibility to the Federal agency or pass-through entity. (2) Except as provided in § 200.312(b), or if the Federal agency or pass-through entity fails to provide requested disposition instructions within 120 days, items of equipment with a current fair market value in excess of $10,000 (per-unit) may be retained or sold by the recipient or subrecipient. However, the Federal agency is entitled to an amount calculated by multiplying the percentage of the Federal agency's contribution towards the original purchase by the current market value or proceeds from the sale. If the equipment is sold, the Federal agency or pass-through entity may permit the recipient or subrecipient to retain, from the Federal share, $1,000 of the proceeds to cover expenses associated with the selling and handling of the equipment. (3) The recipient or subrecipient may transfer title to the property to the Federal Government or to an eligible third party provided that the recipient or subrecipient must be entitled to compensation for its attributable percentage of the current fair market value of the property. (4) In cases where a recipient or subrecipient fails to take appropriate disposition actions, the Federal agency or pass-through entity may direct the recipient or subrecipient to take disposition actions. Condition As part of our audit procedures, we reviewed internal controls over inventory and asset management, including physical inspection and disposition tracking of equipment. For the Fire Department, we determined that no physical inventory of federally funded equipment had been conducted during the required biennial period, and no reconciliation of equipment records to actual assets had been performed. While informal tracking logs and asset purchase records existed, they were incomplete and lacked standardized documentation of asset tag numbers, inspection dates, asset condition, and verification signatures. Moreover, there was no evidence of centralized or departmental oversight to ensure routine physical inventory and compliance with Federal property standards. In addition, we identified the Harbor department failed to properly record the disposition of a federally funded asset. The asset was still marked as “in service” within the equipment listing provided to us during the audit; however the item had in fact been disposed of during the audit period. Cause The Fire Department’s grants team oversees the compliance with required federal equipment procedures, the grants team indicated capacity issues were the main contributor towards the lack of a reconciliation or inventorying of the equipment. The Harbor Departments property related to a vehicle which was disposed of after an accident. This occurred between the departments inventory processes leading to the listing not being updated by mistake. Effect or potential effect The Departments were out of compliance with federal requirements surrounding equipment management, maintenance, and disposal. Questioned costs None Context The Harbor Department special vehicle which had an estimated book value of $0 that was involved in a collision before being disposed of. There were $0 in proceeds received related to the disposal. Identification as a repeat finding if applicable N/A Recommendation We recommend the departments enhance internal controls to ensure its property records include all the requirements under the Uniform Guidance and properly identify all property and equipment purchased with federal funds. We recommend the Fire Department implement a plan to address staffing needs and formalize procedures regarding the reconciliation, tracking, and maintenance of federally funded equipment. We recommend the Harbor Department enhance their procedures on equipment disposals. Views of responsible officials and planned corrective actions The Fire Department will ensure that all grant funds are expended in compliance with grant guidelines, including the completion of a biennial Equipment Inventory and the submission of a certification letter verifying its accuracy to the grantor every other year. Effective June 16, 2025, the Fire Department will conduct an Equipment Inventory and submit a verification letter to the grantor confirming its completion on a biennial basis. The current Equipment Inventory will be completed by the Support Services Bureau by September 30, 2025. The Fire Department will ensure the accompanying verification letter is sent to the grantor along with the updated inventory list. This biennial requirement will be integrated into the Department’s annual calendar. Following the FY2025 inventory, the next cycle will occur in FY2027 and continue in every odd-numbered fiscal year thereafter. The Harbor Department will enhance its written procedures on equipment disposals and provide training to appropriate Finance, Security, and Maintenance Division staff in FY 2025 to ensure compliance and timeliness in following equipment disposal procedures.
Finding Number: 2024-004 Finding Title: Internal Controls and Compliance Over Federally Funded Equipment Compliance Requirement(s): Equipment and Real Property Management Classification: Significant Deficiency Programs: Port Security Grant Program ALN #: 97.056 Pass-through entity: N/A – Direct Award Federal Agency: Department of Homeland Security Federal Award Numbers: EMW-2021-PU-00463-S01 Federal Award Year: 2021 Criteria or specific requirement (including statutory, regulatory, or other citation § 200.313 Equipment. See also § 200.439. (a) Title. Title to equipment acquired under the Federal award will vest upon acquisition in the recipient or subrecipient subject to the conditions of this section. This title must be a conditional title unless a Federal statute specifically authorizes the Federal agency to vest title in the recipient or subrecipient without further responsibility to the Federal Government (and the Federal agency elects to do so). A conditional title means a clear title is withheld by the Federal agency until conditions and requirements specified in the terms and conditions of a Federal award have been fulfilled. Title for equipment vested in a recipient or subrecipient is subject to the following conditions: (1) Use the equipment for the authorized purposes of the project during the period of performance or until the property is no longer needed for the purposes of the project. (2) While the equipment is being used for the originally authorized purpose, the recipient or subrecipient must not dispose of or encumber its title or other interests without the approval of the Federal agency or pass-through entity. (3) Use and dispose of the property in accordance with paragraphs (b), (c), and (e) of this section. (b) General. A State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. Indian Tribes must use, manage, and dispose of equipment acquired under a Federal award in accordance with tribal laws and procedures. If such laws and procedures do not exist, Indian Tribes must follow the guidance in this section. Other recipients and subrecipients, including subrecipients of a State or Indian Tribe, must follow paragraphs (c) through (e) of this section. (c) Use. (1) The recipient or subrecipient must use equipment for the project or program for which it was acquired and for as long as needed, whether or not the project or program continues to be supported by the Federal award. The recipient or subrecipient must not encumber the equipment without prior approval of the Federal agency or pass-through entity. The Federal agency may require the submission of the applicable common forms for reporting on equipment. When no longer needed for the original project or program, the equipment may be used in other activities in the following order of priority: (i) Activities under other Federal awards from the Federal agency that funded the original program or project; then (ii) Activities under Federal awards from other Federal agencies. These activities include consolidated equipment for information technology systems. (2) During the time that equipment is used on the project or program for which it was acquired, the recipient or subrecipient must also make the equipment available for use on other programs or projects supported by the Federal Government, provided that such use will not interfere with the purpose for which it was originally acquired. First preference for other use of the equipment must be given to other programs or projects supported by the Federal agency that financed the equipment. Second preference must be given to programs or projects under Federal awards from other Federal agencies. Use for non-federally funded projects is also permissible, provided such use will not interfere with the purpose for which it was originally acquired. The recipient or subrecipient should consider charging user fees as appropriate. (3) Notwithstanding the encouragement in § 200.307 to earn program income, the recipient or subrecipient must not use equipment acquired with the Federal award to provide services for a fee that is less than a private company would charge for similar services unless specifically authorized by Federal statute. This restriction is effective as long as the Federal Government retains an interest in the equipment. (4) When acquiring replacement equipment, the recipient or subrecipient may either trade-in or sell the equipment and use the proceeds to offset the cost of the replacement equipment. (d) Management requirements. Regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. (e) Disposition. When equipment acquired under a Federal award is no longer needed for the original project, program, or for other activities currently or previously supported by a Federal agency, the recipient or subrecipient must request disposition instructions from the Federal agency or pass-through entity if required by the terms and conditions of the Federal award. Disposition of the equipment will be made as follows, in accordance with Federal agency or pass-through entity disposition instructions: (1) Equipment with a current fair market value of $10,000 or less (per unit) may be retained, sold, or otherwise disposed of with no further responsibility to the Federal agency or pass-through entity. (2) Except as provided in § 200.312(b), or if the Federal agency or pass-through entity fails to provide requested disposition instructions within 120 days, items of equipment with a current fair market value in excess of $10,000 (per-unit) may be retained or sold by the recipient or subrecipient. However, the Federal agency is entitled to an amount calculated by multiplying the percentage of the Federal agency's contribution towards the original purchase by the current market value or proceeds from the sale. If the equipment is sold, the Federal agency or pass-through entity may permit the recipient or subrecipient to retain, from the Federal share, $1,000 of the proceeds to cover expenses associated with the selling and handling of the equipment. (3) The recipient or subrecipient may transfer title to the property to the Federal Government or to an eligible third party provided that the recipient or subrecipient must be entitled to compensation for its attributable percentage of the current fair market value of the property. (4) In cases where a recipient or subrecipient fails to take appropriate disposition actions, the Federal agency or pass-through entity may direct the recipient or subrecipient to take disposition actions. Condition As part of our audit procedures, we reviewed internal controls over inventory and asset management, including physical inspection and disposition tracking of equipment. For the Fire Department, we determined that no physical inventory of federally funded equipment had been conducted during the required biennial period, and no reconciliation of equipment records to actual assets had been performed. While informal tracking logs and asset purchase records existed, they were incomplete and lacked standardized documentation of asset tag numbers, inspection dates, asset condition, and verification signatures. Moreover, there was no evidence of centralized or departmental oversight to ensure routine physical inventory and compliance with Federal property standards. In addition, we identified the Harbor department failed to properly record the disposition of a federally funded asset. The asset was still marked as “in service” within the equipment listing provided to us during the audit; however the item had in fact been disposed of during the audit period. Cause The Fire Department’s grants team oversees the compliance with required federal equipment procedures, the grants team indicated capacity issues were the main contributor towards the lack of a reconciliation or inventorying of the equipment. The Harbor Departments property related to a vehicle which was disposed of after an accident. This occurred between the departments inventory processes leading to the listing not being updated by mistake. Effect or potential effect The Departments were out of compliance with federal requirements surrounding equipment management, maintenance, and disposal. Questioned costs None Context The Harbor Department special vehicle which had an estimated book value of $0 that was involved in a collision before being disposed of. There were $0 in proceeds received related to the disposal. Identification as a repeat finding if applicable N/A Recommendation We recommend the departments enhance internal controls to ensure its property records include all the requirements under the Uniform Guidance and properly identify all property and equipment purchased with federal funds. We recommend the Fire Department implement a plan to address staffing needs and formalize procedures regarding the reconciliation, tracking, and maintenance of federally funded equipment. We recommend the Harbor Department enhance their procedures on equipment disposals. Views of responsible officials and planned corrective actions The Fire Department will ensure that all grant funds are expended in compliance with grant guidelines, including the completion of a biennial Equipment Inventory and the submission of a certification letter verifying its accuracy to the grantor every other year. Effective June 16, 2025, the Fire Department will conduct an Equipment Inventory and submit a verification letter to the grantor confirming its completion on a biennial basis. The current Equipment Inventory will be completed by the Support Services Bureau by September 30, 2025. The Fire Department will ensure the accompanying verification letter is sent to the grantor along with the updated inventory list. This biennial requirement will be integrated into the Department’s annual calendar. Following the FY2025 inventory, the next cycle will occur in FY2027 and continue in every odd-numbered fiscal year thereafter. The Harbor Department will enhance its written procedures on equipment disposals and provide training to appropriate Finance, Security, and Maintenance Division staff in FY 2025 to ensure compliance and timeliness in following equipment disposal procedures.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
Finding 2024-002: Allowable Costs - Capital Expenditures (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criteria: The Uniform Guidance, specifically 2 CFR 200.439(b)(1), notes that capital expenditures for general purpose equipment, buildings and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity. Condition: The Organization did not obtain prior written approval from the granting agency for a vehicle purchased during the year ended June 30, 2024. Cause: The Organization received verbal approval during a call with the granting agency two months before the purchase was made, and had email correspondence with the granting agency discussing the process of allocating a portion of the total vehicle cost to the program. However, there was no prior written approval allowing the vehicle purchase to be allocated to the program. Effect or Potential Effect: The vehicle was not formally approved for purchase prior to payment, which creates the risk of the Organization being reimbursed for unallowable costs. Questioned Costs: $15,535. Context: We noted one instance where a capital expenditure allocated to the program was not supported with prior written approval. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management formally communicate with Federal granting agencies in writing to obtain prior written approval for capital expenditures that are intended to be used in a Federal program.
Finding 2024-002: Allowable Costs - Capital Expenditures (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criteria: The Uniform Guidance, specifically 2 CFR 200.439(b)(1), notes that capital expenditures for general purpose equipment, buildings and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity. Condition: The Organization did not obtain prior written approval from the granting agency for a vehicle purchased during the year ended June 30, 2024. Cause: The Organization received verbal approval during a call with the granting agency two months before the purchase was made, and had email correspondence with the granting agency discussing the process of allocating a portion of the total vehicle cost to the program. However, there was no prior written approval allowing the vehicle purchase to be allocated to the program. Effect or Potential Effect: The vehicle was not formally approved for purchase prior to payment, which creates the risk of the Organization being reimbursed for unallowable costs. Questioned Costs: $15,535. Context: We noted one instance where a capital expenditure allocated to the program was not supported with prior written approval. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management formally communicate with Federal granting agencies in writing to obtain prior written approval for capital expenditures that are intended to be used in a Federal program.
CONDITION: The Northern Cambria School District contracted Eber HVAC, Inc. for the School District’s RTU Replacement Project which constitutes a construction-related purchase which requires prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for this expenditure. This is a repeat finding (2023-001) from the prior fiscal year CRITERIA: PDE and Section 2 CFR 200.439(b) of the Uniform Guidance require prior written approval by the federal or pass-through awarding agency for capital purchases including equipment, buildings, and land. Capital expenditures for special purpose equipment with a unit cost of $5,000 or more must also have prior approval. CAUSE: School District personnel did not review the PDE and Uniform Guidance requirements for capital purchases in advance of contracting for the RTU Replacement Project. EFFECT: The Northern Cambria School District did not comply with the requirements of PDE and 2 CFR 200.439(b) of the Uniform Guidance regarding obtaining prior written approval for capital expenditures. QUESTIONED COST: $818,900 RECOMMENDATION: For all future capital expenditures utilizing federal grant funding, I am recommending that the School District properly complete the necessary PDE, or other awarding agency forms, necessary to receive prior written approval for capital expenditures in accordance with PDE and Section 2 CFR 200.439(b) of the Uniform Guidance regulations. VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and has developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).
CONDITION: The Northern Cambria School District contracted Eber HVAC, Inc. for the School District’s RTU Replacement Project which constitutes a construction-related purchase which requires prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for this expenditure. This is a repeat finding (2023-001) from the prior fiscal year CRITERIA: PDE and Section 2 CFR 200.439(b) of the Uniform Guidance require prior written approval by the federal or pass-through awarding agency for capital purchases including equipment, buildings, and land. Capital expenditures for special purpose equipment with a unit cost of $5,000 or more must also have prior approval. CAUSE: School District personnel did not review the PDE and Uniform Guidance requirements for capital purchases in advance of contracting for the RTU Replacement Project. EFFECT: The Northern Cambria School District did not comply with the requirements of PDE and 2 CFR 200.439(b) of the Uniform Guidance regarding obtaining prior written approval for capital expenditures. QUESTIONED COST: $818,900 RECOMMENDATION: For all future capital expenditures utilizing federal grant funding, I am recommending that the School District properly complete the necessary PDE, or other awarding agency forms, necessary to receive prior written approval for capital expenditures in accordance with PDE and Section 2 CFR 200.439(b) of the Uniform Guidance regulations. VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and has developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).
CONDITION: The Northern Cambria School District contracted Eber HVAC, Inc. for the School District’s RTU Replacement Project which constitutes a construction-related purchase which requires prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for this expenditure. This is a repeat finding (2023-001) from the prior fiscal year CRITERIA: PDE and Section 2 CFR 200.439(b) of the Uniform Guidance require prior written approval by the federal or pass-through awarding agency for capital purchases including equipment, buildings, and land. Capital expenditures for special purpose equipment with a unit cost of $5,000 or more must also have prior approval. CAUSE: School District personnel did not review the PDE and Uniform Guidance requirements for capital purchases in advance of contracting for the RTU Replacement Project. EFFECT: The Northern Cambria School District did not comply with the requirements of PDE and 2 CFR 200.439(b) of the Uniform Guidance regarding obtaining prior written approval for capital expenditures. QUESTIONED COST: $818,900 RECOMMENDATION: For all future capital expenditures utilizing federal grant funding, I am recommending that the School District properly complete the necessary PDE, or other awarding agency forms, necessary to receive prior written approval for capital expenditures in accordance with PDE and Section 2 CFR 200.439(b) of the Uniform Guidance regulations. VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and has developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).
CONDITION: The Northern Cambria School District contracted Eber HVAC, Inc. for the School District’s RTU Replacement Project which constitutes a construction-related purchase which requires prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for this expenditure. This is a repeat finding (2023-001) from the prior fiscal year CRITERIA: PDE and Section 2 CFR 200.439(b) of the Uniform Guidance require prior written approval by the federal or pass-through awarding agency for capital purchases including equipment, buildings, and land. Capital expenditures for special purpose equipment with a unit cost of $5,000 or more must also have prior approval. CAUSE: School District personnel did not review the PDE and Uniform Guidance requirements for capital purchases in advance of contracting for the RTU Replacement Project. EFFECT: The Northern Cambria School District did not comply with the requirements of PDE and 2 CFR 200.439(b) of the Uniform Guidance regarding obtaining prior written approval for capital expenditures. QUESTIONED COST: $818,900 RECOMMENDATION: For all future capital expenditures utilizing federal grant funding, I am recommending that the School District properly complete the necessary PDE, or other awarding agency forms, necessary to receive prior written approval for capital expenditures in accordance with PDE and Section 2 CFR 200.439(b) of the Uniform Guidance regulations. VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and has developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).
Significant Deficiency 2024-001. Equipment and Real Property Management United States Department of Education, Passed Through New York State, Department of Education: Education Stabilization Fund COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief Fund ALN: 84.425U Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Condition: The District did not include capital expenditures paid with CRRSA and ARP grant funds in its capital assets inventory records. Cause: The District uses specific expenditure codes in its special aid fund to identify and track capital expenditures incurred that are reimbursable under the CRRSA and ARP grant awards; those capital expenditure codes are different from the District’s standard object code (.200) for equipment purchases. Due to a clerical oversight, those capital expenditures recorded in the special aid fund were inadvertently left off the District’s end-of-year list of annual capital assets additions that would be used to update its capital assets inventory records. Effect: Not including and differentiating capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for the disposal of those capital assets. Questioned Costs: None reported. Context: The District upgraded the HVAC systems at its buildings using CRRSA and ARP grant awards during the 2023-2024 fiscal year. Before the CRRSA and ARP grants, the District had never used grant awards to pay for capital improvement projects and thus, District personnel was not accustomed to reviewing expenditure codes in the special aid fund other than the equipment purchases expenditure codes when compiling the listing of equipment and capital expenditures during the year for the District’s third-party capital assets management company to update its capital assets inventory record. Identification of a Repeat Finding: This is not a repeat finding from the immediately prior audit. Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital expenditures recorded in all of the District’s governmental funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records. Views of Responsible Officials of Auditee: Management agrees with the finding and will ensure that equipment and capital expenditures paid with federal funds are identified and included in the District’s fixed assets inventory records as part of the annual fixed assets reconciliation process.
Significant Deficiency 2024-001. Equipment and Real Property Management United States Department of Education, Passed Through New York State, Department of Education: Education Stabilization Fund COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief Fund ALN: 84.425U Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Condition: The District did not include capital expenditures paid with CRRSA and ARP grant funds in its capital assets inventory records. Cause: The District uses specific expenditure codes in its special aid fund to identify and track capital expenditures incurred that are reimbursable under the CRRSA and ARP grant awards; those capital expenditure codes are different from the District’s standard object code (.200) for equipment purchases. Due to a clerical oversight, those capital expenditures recorded in the special aid fund were inadvertently left off the District’s end-of-year list of annual capital assets additions that would be used to update its capital assets inventory records. Effect: Not including and differentiating capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for the disposal of those capital assets. Questioned Costs: None reported. Context: The District upgraded the HVAC systems at its buildings using CRRSA and ARP grant awards during the 2023-2024 fiscal year. Before the CRRSA and ARP grants, the District had never used grant awards to pay for capital improvement projects and thus, District personnel was not accustomed to reviewing expenditure codes in the special aid fund other than the equipment purchases expenditure codes when compiling the listing of equipment and capital expenditures during the year for the District’s third-party capital assets management company to update its capital assets inventory record. Identification of a Repeat Finding: This is not a repeat finding from the immediately prior audit. Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital expenditures recorded in all of the District’s governmental funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records. Views of Responsible Officials of Auditee: Management agrees with the finding and will ensure that equipment and capital expenditures paid with federal funds are identified and included in the District’s fixed assets inventory records as part of the annual fixed assets reconciliation process.
U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 AMERICAN RESCUE PLAN - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425U PASS-THROUGH NUMBER 1402 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 Allowable Costs/Costs Principles Criteria or specific requirement: Purchases of equipment and other capital expenditures require the prior written approval of the Federal awarding agency or pass-through entity, as specified in Office of Management and Budget (OMB) 2 CFR Section 200.439. Condition: The District did not obtain prior approval from the Arkansas Division of Elementary and Secondary Education (DESE) for the purchase/installation of HVAC units for the central cafeteria project totaling $24,018 paid from the COVID-19 Education Stabilization Fund. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $24,018 were paid from COVID-19-Education Stabilization Fund. Questioned costs: The amount of questioned costs was $24,018. Context: An examination of 11 checks (totaling $734,487) from a population of 15 checks (totaling $1,190,357). Identification as a repeat finding: No Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: At the time of the purchase for this particular building, the district had several prior approval applications for HVAC replacement submitted to DESE for approval. We believe this one had been submitted as well but was unable to confirm that with DESE. In the future, we will develop a better checklist for items submitted to DESE for prior approvals so nothing is overlooked.
Significant Deficiency 2024-001. Equipment and Real Property Management United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: Governor's Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief – Homeless Youth and Children ALN: 84.425W Condition: The District did not include the capital expenditures for the “Unit Ventilators Replacement Project” paid with CRRSA ESSER 2 funds in its current year’s capital assets inventory record. Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Cause: The District recorded expenditures relating to the “Unit Ventilators Replacement Project” as purchased services instead of equipment based on instructions from the pass-through agency. As a result, the District did not identify these capital expenditures as capital assets that should be added to the capital assets inventory listing. Effect: The failure to include capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for assets inventory management and the subsequent disposal of those capital assets. Questioned Costs: None reported. Context: The District uses specific expenditure codes in its special aid fund to identify and track various categories of expenditures incurred that are reimbursable under various federal grants, including the CRRSA ESSER 2 grant award. The District was instructed by the New York State Education Department to include its unit ventilators replacement project costs in the District’s CRRSA ESSER 2 budget application as purchased services instead of equipment; thus, the District recorded the expenditures for the unit ventilators replacement project in a contractual expenditures object code (.400) instead of the standard expenditure object code (.200) for equipment purchases. As a result, when District personnel performed the annual review of the equipment expenditure codes of the District’s governmental funds to compile the listing of equipment additions during the year to update its capital assets inventory record, the cost of the unit ventilators replacement project was not included. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital expenditures purchased with federal funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records. Views of Responsible Officials of Auditee: Management agrees with the finding. The District’s Assistant Superintendent for Business and Operations will review and update the existing procedures relating to the recording and tracking of capital assets purchased with federal funds.
Significant Deficiency 2024-001. Equipment and Real Property Management United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: Governor's Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief – Homeless Youth and Children ALN: 84.425W Condition: The District did not include the capital expenditures for the “Unit Ventilators Replacement Project” paid with CRRSA ESSER 2 funds in its current year’s capital assets inventory record. Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Cause: The District recorded expenditures relating to the “Unit Ventilators Replacement Project” as purchased services instead of equipment based on instructions from the pass-through agency. As a result, the District did not identify these capital expenditures as capital assets that should be added to the capital assets inventory listing. Effect: The failure to include capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for assets inventory management and the subsequent disposal of those capital assets. Questioned Costs: None reported. Context: The District uses specific expenditure codes in its special aid fund to identify and track various categories of expenditures incurred that are reimbursable under various federal grants, including the CRRSA ESSER 2 grant award. The District was instructed by the New York State Education Department to include its unit ventilators replacement project costs in the District’s CRRSA ESSER 2 budget application as purchased services instead of equipment; thus, the District recorded the expenditures for the unit ventilators replacement project in a contractual expenditures object code (.400) instead of the standard expenditure object code (.200) for equipment purchases. As a result, when District personnel performed the annual review of the equipment expenditure codes of the District’s governmental funds to compile the listing of equipment additions during the year to update its capital assets inventory record, the cost of the unit ventilators replacement project was not included. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital expenditures purchased with federal funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records. Views of Responsible Officials of Auditee: Management agrees with the finding. The District’s Assistant Superintendent for Business and Operations will review and update the existing procedures relating to the recording and tracking of capital assets purchased with federal funds.
Significant Deficiency 2024-001. Equipment and Real Property Management United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: Governor's Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief – Homeless Youth and Children ALN: 84.425W Condition: The District did not include the capital expenditures for the “Unit Ventilators Replacement Project” paid with CRRSA ESSER 2 funds in its current year’s capital assets inventory record. Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Cause: The District recorded expenditures relating to the “Unit Ventilators Replacement Project” as purchased services instead of equipment based on instructions from the pass-through agency. As a result, the District did not identify these capital expenditures as capital assets that should be added to the capital assets inventory listing. Effect: The failure to include capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for assets inventory management and the subsequent disposal of those capital assets. Questioned Costs: None reported. Context: The District uses specific expenditure codes in its special aid fund to identify and track various categories of expenditures incurred that are reimbursable under various federal grants, including the CRRSA ESSER 2 grant award. The District was instructed by the New York State Education Department to include its unit ventilators replacement project costs in the District’s CRRSA ESSER 2 budget application as purchased services instead of equipment; thus, the District recorded the expenditures for the unit ventilators replacement project in a contractual expenditures object code (.400) instead of the standard expenditure object code (.200) for equipment purchases. As a result, when District personnel performed the annual review of the equipment expenditure codes of the District’s governmental funds to compile the listing of equipment additions during the year to update its capital assets inventory record, the cost of the unit ventilators replacement project was not included. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital expenditures purchased with federal funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records. Views of Responsible Officials of Auditee: Management agrees with the finding. The District’s Assistant Superintendent for Business and Operations will review and update the existing procedures relating to the recording and tracking of capital assets purchased with federal funds.
Significant Deficiency 2024-001. Equipment and Real Property Management United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: Governor's Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief – Homeless Youth and Children ALN: 84.425W Condition: The District did not include the capital expenditures for the “Unit Ventilators Replacement Project” paid with CRRSA ESSER 2 funds in its current year’s capital assets inventory record. Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Cause: The District recorded expenditures relating to the “Unit Ventilators Replacement Project” as purchased services instead of equipment based on instructions from the pass-through agency. As a result, the District did not identify these capital expenditures as capital assets that should be added to the capital assets inventory listing. Effect: The failure to include capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for assets inventory management and the subsequent disposal of those capital assets. Questioned Costs: None reported. Context: The District uses specific expenditure codes in its special aid fund to identify and track various categories of expenditures incurred that are reimbursable under various federal grants, including the CRRSA ESSER 2 grant award. The District was instructed by the New York State Education Department to include its unit ventilators replacement project costs in the District’s CRRSA ESSER 2 budget application as purchased services instead of equipment; thus, the District recorded the expenditures for the unit ventilators replacement project in a contractual expenditures object code (.400) instead of the standard expenditure object code (.200) for equipment purchases. As a result, when District personnel performed the annual review of the equipment expenditure codes of the District’s governmental funds to compile the listing of equipment additions during the year to update its capital assets inventory record, the cost of the unit ventilators replacement project was not included. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital expenditures purchased with federal funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records. Views of Responsible Officials of Auditee: Management agrees with the finding. The District’s Assistant Superintendent for Business and Operations will review and update the existing procedures relating to the recording and tracking of capital assets purchased with federal funds.
Significant Deficiency 2024-001. Equipment and Real Property Management United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: Governor's Emergency Education Relief Fund ALN: 84.425C COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief – Homeless Youth and Children ALN: 84.425W Condition: The District did not include the capital expenditures for the “Unit Ventilators Replacement Project” paid with CRRSA ESSER 2 funds in its current year’s capital assets inventory record. Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Cause: The District recorded expenditures relating to the “Unit Ventilators Replacement Project” as purchased services instead of equipment based on instructions from the pass-through agency. As a result, the District did not identify these capital expenditures as capital assets that should be added to the capital assets inventory listing. Effect: The failure to include capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for assets inventory management and the subsequent disposal of those capital assets. Questioned Costs: None reported. Context: The District uses specific expenditure codes in its special aid fund to identify and track various categories of expenditures incurred that are reimbursable under various federal grants, including the CRRSA ESSER 2 grant award. The District was instructed by the New York State Education Department to include its unit ventilators replacement project costs in the District’s CRRSA ESSER 2 budget application as purchased services instead of equipment; thus, the District recorded the expenditures for the unit ventilators replacement project in a contractual expenditures object code (.400) instead of the standard expenditure object code (.200) for equipment purchases. As a result, when District personnel performed the annual review of the equipment expenditure codes of the District’s governmental funds to compile the listing of equipment additions during the year to update its capital assets inventory record, the cost of the unit ventilators replacement project was not included. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital expenditures purchased with federal funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records. Views of Responsible Officials of Auditee: Management agrees with the finding. The District’s Assistant Superintendent for Business and Operations will review and update the existing procedures relating to the recording and tracking of capital assets purchased with federal funds.
2024-001. Equipment and Real Property Management United States of Department of Education, Passed Through New York State, Department of Education: Education Stabilization Fund COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Condition: The District did not include COVID grants-funded capital improvements in its capital assets inventory records. Cause: Insufficient internal controls over the tracking and reporting of federally-funded capital improvements. The District recorded expenditures for CRRSA and ARP grants-funded capital improvements and upgrades to its facilities and ventilation systems as contractual/purchased services in the special aid fund based on instructions from the pass-through entity instead of in the capital projects fund. As a result, District personnel compiling annual capital additions information did not identify the COVID grants-funded capital improvements as capital assets that should be added to the capital assets inventory listing. Effect: Failure to include capital improvements acquired with Federal awards in the District’s capital assets inventory records affects its financial reporting in conformity with Generally Accepted Accounting Principles (GAAP) and could lead to improper or non-compliant procedures for assets inventory management, and the subsequent disposal of those capital assets. Questioned Costs: None reported. Context: The District uses specific expenditure codes in its special aid fund to identify and track various categories of expenditures incurred that are reimbursable under various Federal awards, including the ESSER grant awards under the CRRSA Act and ARP. Based on instructions from the pass-through entity, the New York State Education Department (NYSED), the District included eligible capital improvement costs in its CRRSA ESSER 2 and ARP ESSER 3 budget applications as purchased services, which were approved by the NYSED, and recorded the expenditures in its special aid fund’s contractual expenditures object code (.400 code). When District personnel compiled the listing of capital improvements additions for the fiscal year to perform the annual update of the capital assets inventory record, they reviewed and included capital costs from the District’s capital projects fund, but did not review or identify the costs of the various capital improvements that were recorded in the special aid fund’s .400 contractual expenditures code. Identification of a Repeat Finding: This is not a repeat finding from the immediately prior audit. Recommendation: The District should review and revise its existing procedures for compiling annual capital assets additions information to ensure capital expenditures purchased with Federal awards that meet the District’s capitalization threshold are considered and evaluated for inclusion in the District’s annual capital assets inventory records as appropriate. Views of Responsible Officials of Auditee: The District acknowledges but does not fully agree with this finding. federally-funded expenditures were recorded in the Special Aid Fund as purchased services, both on the FS-10 budgets and the purchase orders for portion of the capital improvement projects the PO’s were issued against. These payments are partially payments to contractors for wages, labor, materials, and other items, not necessarily equipment. The methods of financing for all these costs are reported on the State SA-139 Building Project Data Forms as partially funded by grants from ARPA & ESSER and annual district appropriation budget; hence, in the District’s annual capital asset inventory report, they will eventually be reconciled with the final building project cost report and will be added and tracked as part of the whole capital improvement projects.
2024-001. Equipment and Real Property Management United States of Department of Education, Passed Through New York State, Department of Education: Education Stabilization Fund COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Condition: The District did not include COVID grants-funded capital improvements in its capital assets inventory records. Cause: Insufficient internal controls over the tracking and reporting of federally-funded capital improvements. The District recorded expenditures for CRRSA and ARP grants-funded capital improvements and upgrades to its facilities and ventilation systems as contractual/purchased services in the special aid fund based on instructions from the pass-through entity instead of in the capital projects fund. As a result, District personnel compiling annual capital additions information did not identify the COVID grants-funded capital improvements as capital assets that should be added to the capital assets inventory listing. Effect: Failure to include capital improvements acquired with Federal awards in the District’s capital assets inventory records affects its financial reporting in conformity with Generally Accepted Accounting Principles (GAAP) and could lead to improper or non-compliant procedures for assets inventory management, and the subsequent disposal of those capital assets. Questioned Costs: None reported. Context: The District uses specific expenditure codes in its special aid fund to identify and track various categories of expenditures incurred that are reimbursable under various Federal awards, including the ESSER grant awards under the CRRSA Act and ARP. Based on instructions from the pass-through entity, the New York State Education Department (NYSED), the District included eligible capital improvement costs in its CRRSA ESSER 2 and ARP ESSER 3 budget applications as purchased services, which were approved by the NYSED, and recorded the expenditures in its special aid fund’s contractual expenditures object code (.400 code). When District personnel compiled the listing of capital improvements additions for the fiscal year to perform the annual update of the capital assets inventory record, they reviewed and included capital costs from the District’s capital projects fund, but did not review or identify the costs of the various capital improvements that were recorded in the special aid fund’s .400 contractual expenditures code. Identification of a Repeat Finding: This is not a repeat finding from the immediately prior audit. Recommendation: The District should review and revise its existing procedures for compiling annual capital assets additions information to ensure capital expenditures purchased with Federal awards that meet the District’s capitalization threshold are considered and evaluated for inclusion in the District’s annual capital assets inventory records as appropriate. Views of Responsible Officials of Auditee: The District acknowledges but does not fully agree with this finding. federally-funded expenditures were recorded in the Special Aid Fund as purchased services, both on the FS-10 budgets and the purchase orders for portion of the capital improvement projects the PO’s were issued against. These payments are partially payments to contractors for wages, labor, materials, and other items, not necessarily equipment. The methods of financing for all these costs are reported on the State SA-139 Building Project Data Forms as partially funded by grants from ARPA & ESSER and annual district appropriation budget; hence, in the District’s annual capital asset inventory report, they will eventually be reconciled with the final building project cost report and will be added and tracked as part of the whole capital improvement projects.
CONDITION: The Northern Cambria School District contracted Eber HVAC, Inc. for the School District’s RTU Replacement Project which constitutes a construction-related purchase which requires prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for this expenditure. This is a repeat finding (2023-001) from the prior fiscal year CRITERIA: PDE and Section 2 CFR 200.439(b) of the Uniform Guidance require prior written approval by the federal or pass-through awarding agency for capital purchases including equipment, buildings, and land. Capital expenditures for special purpose equipment with a unit cost of $5,000 or more must also have prior approval. CAUSE: School District personnel did not review the PDE and Uniform Guidance requirements for capital purchases in advance of contracting for the RTU Replacement Project. EFFECT: The Northern Cambria School District did not comply with the requirements of PDE and 2 CFR 200.439(b) of the Uniform Guidance regarding obtaining prior written approval for capital expenditures. QUESTIONED COST: $818,900 RECOMMENDATION: For all future capital expenditures utilizing federal grant funding, I am recommending that the School District properly complete the necessary PDE, or other awarding agency forms, necessary to receive prior written approval for capital expenditures in accordance with PDE and Section 2 CFR 200.439(b) of the Uniform Guidance regulations. VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and has developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).
CONDITION: The Northern Cambria School District contracted Eber HVAC, Inc. for the School District’s RTU Replacement Project which constitutes a construction-related purchase which requires prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for this expenditure. This is a repeat finding (2023-001) from the prior fiscal year CRITERIA: PDE and Section 2 CFR 200.439(b) of the Uniform Guidance require prior written approval by the federal or pass-through awarding agency for capital purchases including equipment, buildings, and land. Capital expenditures for special purpose equipment with a unit cost of $5,000 or more must also have prior approval. CAUSE: School District personnel did not review the PDE and Uniform Guidance requirements for capital purchases in advance of contracting for the RTU Replacement Project. EFFECT: The Northern Cambria School District did not comply with the requirements of PDE and 2 CFR 200.439(b) of the Uniform Guidance regarding obtaining prior written approval for capital expenditures. QUESTIONED COST: $818,900 RECOMMENDATION: For all future capital expenditures utilizing federal grant funding, I am recommending that the School District properly complete the necessary PDE, or other awarding agency forms, necessary to receive prior written approval for capital expenditures in accordance with PDE and Section 2 CFR 200.439(b) of the Uniform Guidance regulations. VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and has developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).
CONDITION: The Northern Cambria School District contracted Eber HVAC, Inc. for the School District’s RTU Replacement Project which constitutes a construction-related purchase which requires prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for this expenditure. This is a repeat finding (2023-001) from the prior fiscal year CRITERIA: PDE and Section 2 CFR 200.439(b) of the Uniform Guidance require prior written approval by the federal or pass-through awarding agency for capital purchases including equipment, buildings, and land. Capital expenditures for special purpose equipment with a unit cost of $5,000 or more must also have prior approval. CAUSE: School District personnel did not review the PDE and Uniform Guidance requirements for capital purchases in advance of contracting for the RTU Replacement Project. EFFECT: The Northern Cambria School District did not comply with the requirements of PDE and 2 CFR 200.439(b) of the Uniform Guidance regarding obtaining prior written approval for capital expenditures. QUESTIONED COST: $818,900 RECOMMENDATION: For all future capital expenditures utilizing federal grant funding, I am recommending that the School District properly complete the necessary PDE, or other awarding agency forms, necessary to receive prior written approval for capital expenditures in accordance with PDE and Section 2 CFR 200.439(b) of the Uniform Guidance regulations. VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and has developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).
CONDITION: The Northern Cambria School District contracted Eber HVAC, Inc. for the School District’s RTU Replacement Project which constitutes a construction-related purchase which requires prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for this expenditure. This is a repeat finding (2023-001) from the prior fiscal year CRITERIA: PDE and Section 2 CFR 200.439(b) of the Uniform Guidance require prior written approval by the federal or pass-through awarding agency for capital purchases including equipment, buildings, and land. Capital expenditures for special purpose equipment with a unit cost of $5,000 or more must also have prior approval. CAUSE: School District personnel did not review the PDE and Uniform Guidance requirements for capital purchases in advance of contracting for the RTU Replacement Project. EFFECT: The Northern Cambria School District did not comply with the requirements of PDE and 2 CFR 200.439(b) of the Uniform Guidance regarding obtaining prior written approval for capital expenditures. QUESTIONED COST: $818,900 RECOMMENDATION: For all future capital expenditures utilizing federal grant funding, I am recommending that the School District properly complete the necessary PDE, or other awarding agency forms, necessary to receive prior written approval for capital expenditures in accordance with PDE and Section 2 CFR 200.439(b) of the Uniform Guidance regulations. VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and has developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).
50000 – Equipment Real Property Management (Material Weakness and Material Non- Compliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education Program Name: COVID-19 ESSER III Fund: Learning Loss, COVID-19 ESSER III Fund, ESSER III State Reserve Emergency Needs, COVID-19 ESSER III State Reserve Learning Loss, COVID-19 American Rescue Plan – Homeless Children and Youth II Federal Financial Assistance Listing: 84.425U, 84.425W Compliance Requirement: Equipment Real Property Management Type of Finding: Material Weakness and Material Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1) states: “Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or passthrough entity.” Furthermore, the California Department of Education’s (CDE) FAQs on Capital Expenditures state the following: “In accordance with 2 CFR 200.439, prior approval is required for any single big-ticket purchases at the cost of $5,000 or more using the funding sources cited above. These purchases can include general purpose equipment, buildings, and land, including material improvements. This means one costly item (or several items which make up one unit) and the cost includes all the ancillary expenses such as design costs, new electrical circuit for the item, and other related fees. To obtain approval, an LEA must fill out the Capital Expenditures Pre-Approval Application Form.” Condition The District had a total of $193,002 in capital expenditures charged to ESF that was not preapproved by CDE. Cause The cause appears to be attributed to the District’s improper monitoring and lack of knowledge over this specific requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Effect As a result of the condition identified, the District was not in compliance with the Code of Federal Regulations, Title 2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1). Questioned Costs A total of $193,002 in questioned costs were noted based on the condition identified. Context A single transaction was identified and was selected for testing. The testing resulted in the condition identified above. Repeat Finding Yes. See prior year finding 2023-003. Recommendation The District should become familiar with all of the compliance requirements with ESF. As a resource, the District should utilize a combination of guidance provided by CDE and also by Subpart E of the Uniform Guidance that provides guidance on cost principles. Additionally, the District should establish more effective control activities and monitoring over how Federal funds are spent to ensure compliance, moving forward. Corrective Action Plan and Views of Responsible Officials The project was identified in District plans and executed immediately prior to the change in administrative leadership. After review it was noticed that prior capital approval was not obtained prior execution of the project. Applications were subsequently submitted and under review by the CDE at the time of this report preparation. The District acknowledges and has provided professional development with staff, so all are aware of dealing with items that are obtained with federal funds. Pending final answer regarding the prior approval by the CDE will determine the next action of the District.
50000 – Equipment Real Property Management (Material Weakness and Material Non- Compliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education Program Name: COVID-19 ESSER III Fund: Learning Loss, COVID-19 ESSER III Fund, ESSER III State Reserve Emergency Needs, COVID-19 ESSER III State Reserve Learning Loss, COVID-19 American Rescue Plan – Homeless Children and Youth II Federal Financial Assistance Listing: 84.425U, 84.425W Compliance Requirement: Equipment Real Property Management Type of Finding: Material Weakness and Material Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1) states: “Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or passthrough entity.” Furthermore, the California Department of Education’s (CDE) FAQs on Capital Expenditures state the following: “In accordance with 2 CFR 200.439, prior approval is required for any single big-ticket purchases at the cost of $5,000 or more using the funding sources cited above. These purchases can include general purpose equipment, buildings, and land, including material improvements. This means one costly item (or several items which make up one unit) and the cost includes all the ancillary expenses such as design costs, new electrical circuit for the item, and other related fees. To obtain approval, an LEA must fill out the Capital Expenditures Pre-Approval Application Form.” Condition The District had a total of $193,002 in capital expenditures charged to ESF that was not preapproved by CDE. Cause The cause appears to be attributed to the District’s improper monitoring and lack of knowledge over this specific requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Effect As a result of the condition identified, the District was not in compliance with the Code of Federal Regulations, Title 2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1). Questioned Costs A total of $193,002 in questioned costs were noted based on the condition identified. Context A single transaction was identified and was selected for testing. The testing resulted in the condition identified above. Repeat Finding Yes. See prior year finding 2023-003. Recommendation The District should become familiar with all of the compliance requirements with ESF. As a resource, the District should utilize a combination of guidance provided by CDE and also by Subpart E of the Uniform Guidance that provides guidance on cost principles. Additionally, the District should establish more effective control activities and monitoring over how Federal funds are spent to ensure compliance, moving forward. Corrective Action Plan and Views of Responsible Officials The project was identified in District plans and executed immediately prior to the change in administrative leadership. After review it was noticed that prior capital approval was not obtained prior execution of the project. Applications were subsequently submitted and under review by the CDE at the time of this report preparation. The District acknowledges and has provided professional development with staff, so all are aware of dealing with items that are obtained with federal funds. Pending final answer regarding the prior approval by the CDE will determine the next action of the District.
50000 – Equipment Real Property Management (Material Weakness and Material Non- Compliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education Program Name: COVID-19 ESSER III Fund: Learning Loss, COVID-19 ESSER III Fund, ESSER III State Reserve Emergency Needs, COVID-19 ESSER III State Reserve Learning Loss, COVID-19 American Rescue Plan – Homeless Children and Youth II Federal Financial Assistance Listing: 84.425U, 84.425W Compliance Requirement: Equipment Real Property Management Type of Finding: Material Weakness and Material Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1) states: “Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or passthrough entity.” Furthermore, the California Department of Education’s (CDE) FAQs on Capital Expenditures state the following: “In accordance with 2 CFR 200.439, prior approval is required for any single big-ticket purchases at the cost of $5,000 or more using the funding sources cited above. These purchases can include general purpose equipment, buildings, and land, including material improvements. This means one costly item (or several items which make up one unit) and the cost includes all the ancillary expenses such as design costs, new electrical circuit for the item, and other related fees. To obtain approval, an LEA must fill out the Capital Expenditures Pre-Approval Application Form.” Condition The District had a total of $193,002 in capital expenditures charged to ESF that was not preapproved by CDE. Cause The cause appears to be attributed to the District’s improper monitoring and lack of knowledge over this specific requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Effect As a result of the condition identified, the District was not in compliance with the Code of Federal Regulations, Title 2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1). Questioned Costs A total of $193,002 in questioned costs were noted based on the condition identified. Context A single transaction was identified and was selected for testing. The testing resulted in the condition identified above. Repeat Finding Yes. See prior year finding 2023-003. Recommendation The District should become familiar with all of the compliance requirements with ESF. As a resource, the District should utilize a combination of guidance provided by CDE and also by Subpart E of the Uniform Guidance that provides guidance on cost principles. Additionally, the District should establish more effective control activities and monitoring over how Federal funds are spent to ensure compliance, moving forward. Corrective Action Plan and Views of Responsible Officials The project was identified in District plans and executed immediately prior to the change in administrative leadership. After review it was noticed that prior capital approval was not obtained prior execution of the project. Applications were subsequently submitted and under review by the CDE at the time of this report preparation. The District acknowledges and has provided professional development with staff, so all are aware of dealing with items that are obtained with federal funds. Pending final answer regarding the prior approval by the CDE will determine the next action of the District.
50000 – Equipment Real Property Management (Material Weakness and Material Non- Compliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education Program Name: COVID-19 ESSER III Fund: Learning Loss, COVID-19 ESSER III Fund, ESSER III State Reserve Emergency Needs, COVID-19 ESSER III State Reserve Learning Loss, COVID-19 American Rescue Plan – Homeless Children and Youth II Federal Financial Assistance Listing: 84.425U, 84.425W Compliance Requirement: Equipment Real Property Management Type of Finding: Material Weakness and Material Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1) states: “Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or passthrough entity.” Furthermore, the California Department of Education’s (CDE) FAQs on Capital Expenditures state the following: “In accordance with 2 CFR 200.439, prior approval is required for any single big-ticket purchases at the cost of $5,000 or more using the funding sources cited above. These purchases can include general purpose equipment, buildings, and land, including material improvements. This means one costly item (or several items which make up one unit) and the cost includes all the ancillary expenses such as design costs, new electrical circuit for the item, and other related fees. To obtain approval, an LEA must fill out the Capital Expenditures Pre-Approval Application Form.” Condition The District had a total of $193,002 in capital expenditures charged to ESF that was not preapproved by CDE. Cause The cause appears to be attributed to the District’s improper monitoring and lack of knowledge over this specific requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Effect As a result of the condition identified, the District was not in compliance with the Code of Federal Regulations, Title 2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1). Questioned Costs A total of $193,002 in questioned costs were noted based on the condition identified. Context A single transaction was identified and was selected for testing. The testing resulted in the condition identified above. Repeat Finding Yes. See prior year finding 2023-003. Recommendation The District should become familiar with all of the compliance requirements with ESF. As a resource, the District should utilize a combination of guidance provided by CDE and also by Subpart E of the Uniform Guidance that provides guidance on cost principles. Additionally, the District should establish more effective control activities and monitoring over how Federal funds are spent to ensure compliance, moving forward. Corrective Action Plan and Views of Responsible Officials The project was identified in District plans and executed immediately prior to the change in administrative leadership. After review it was noticed that prior capital approval was not obtained prior execution of the project. Applications were subsequently submitted and under review by the CDE at the time of this report preparation. The District acknowledges and has provided professional development with staff, so all are aware of dealing with items that are obtained with federal funds. Pending final answer regarding the prior approval by the CDE will determine the next action of the District.
50000 – Equipment Real Property Management (Material Weakness and Material Non- Compliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education Program Name: COVID-19 ESSER III Fund: Learning Loss, COVID-19 ESSER III Fund, ESSER III State Reserve Emergency Needs, COVID-19 ESSER III State Reserve Learning Loss, COVID-19 American Rescue Plan – Homeless Children and Youth II Federal Financial Assistance Listing: 84.425U, 84.425W Compliance Requirement: Equipment Real Property Management Type of Finding: Material Weakness and Material Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1) states: “Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or passthrough entity.” Furthermore, the California Department of Education’s (CDE) FAQs on Capital Expenditures state the following: “In accordance with 2 CFR 200.439, prior approval is required for any single big-ticket purchases at the cost of $5,000 or more using the funding sources cited above. These purchases can include general purpose equipment, buildings, and land, including material improvements. This means one costly item (or several items which make up one unit) and the cost includes all the ancillary expenses such as design costs, new electrical circuit for the item, and other related fees. To obtain approval, an LEA must fill out the Capital Expenditures Pre-Approval Application Form.” Condition The District had a total of $193,002 in capital expenditures charged to ESF that was not preapproved by CDE. Cause The cause appears to be attributed to the District’s improper monitoring and lack of knowledge over this specific requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Effect As a result of the condition identified, the District was not in compliance with the Code of Federal Regulations, Title 2, Subtitle A, Chapter II, Part 200, Subpart E, Section 200.439(a)(1). Questioned Costs A total of $193,002 in questioned costs were noted based on the condition identified. Context A single transaction was identified and was selected for testing. The testing resulted in the condition identified above. Repeat Finding Yes. See prior year finding 2023-003. Recommendation The District should become familiar with all of the compliance requirements with ESF. As a resource, the District should utilize a combination of guidance provided by CDE and also by Subpart E of the Uniform Guidance that provides guidance on cost principles. Additionally, the District should establish more effective control activities and monitoring over how Federal funds are spent to ensure compliance, moving forward. Corrective Action Plan and Views of Responsible Officials The project was identified in District plans and executed immediately prior to the change in administrative leadership. After review it was noticed that prior capital approval was not obtained prior execution of the project. Applications were subsequently submitted and under review by the CDE at the time of this report preparation. The District acknowledges and has provided professional development with staff, so all are aware of dealing with items that are obtained with federal funds. Pending final answer regarding the prior approval by the CDE will determine the next action of the District.
Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Numbers: 6AZ300400, 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $58,433 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.303, the District is required to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, 2 CFR §200.439 requires capital expenditures for special purpose equipment with a unit cost of $5,000 or more to have the prior written approval of the Federal awarding agency or pass‐through entity. This includes ensuring a Capital Expenditure Pre‐Approval Request Form is submitted to Arizona Department of Education (ADE) for approval prior to purchasing equipment that is not included on ADE's Food and Nutrition Service approved equipment list. Condition The District did not submit a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing equipment items not on the ADE Pre‐Approved Capital Equipment list. Cause The District was unaware that it was required to get pre‐approval from ADE for this type of purchase. Effect The District charged unallowable costs to the program. Context The District purchased two software systems related to the CNC POS for $20,920 and $29,692, and one garbage disposal for $7,821, without submitting a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing items not on the ADE Pre‐Approved Capital Equipment list. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Management should review all transactions to ensure that program costs are allowable and in adherence to applicable federal requirements. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Numbers: 6AZ300400, 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $58,433 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.303, the District is required to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, 2 CFR §200.439 requires capital expenditures for special purpose equipment with a unit cost of $5,000 or more to have the prior written approval of the Federal awarding agency or pass‐through entity. This includes ensuring a Capital Expenditure Pre‐Approval Request Form is submitted to Arizona Department of Education (ADE) for approval prior to purchasing equipment that is not included on ADE's Food and Nutrition Service approved equipment list. Condition The District did not submit a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing equipment items not on the ADE Pre‐Approved Capital Equipment list. Cause The District was unaware that it was required to get pre‐approval from ADE for this type of purchase. Effect The District charged unallowable costs to the program. Context The District purchased two software systems related to the CNC POS for $20,920 and $29,692, and one garbage disposal for $7,821, without submitting a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing items not on the ADE Pre‐Approved Capital Equipment list. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Management should review all transactions to ensure that program costs are allowable and in adherence to applicable federal requirements. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Numbers: 6AZ300400, 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $58,433 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.303, the District is required to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, 2 CFR §200.439 requires capital expenditures for special purpose equipment with a unit cost of $5,000 or more to have the prior written approval of the Federal awarding agency or pass‐through entity. This includes ensuring a Capital Expenditure Pre‐Approval Request Form is submitted to Arizona Department of Education (ADE) for approval prior to purchasing equipment that is not included on ADE's Food and Nutrition Service approved equipment list. Condition The District did not submit a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing equipment items not on the ADE Pre‐Approved Capital Equipment list. Cause The District was unaware that it was required to get pre‐approval from ADE for this type of purchase. Effect The District charged unallowable costs to the program. Context The District purchased two software systems related to the CNC POS for $20,920 and $29,692, and one garbage disposal for $7,821, without submitting a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing items not on the ADE Pre‐Approved Capital Equipment list. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Management should review all transactions to ensure that program costs are allowable and in adherence to applicable federal requirements. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Numbers: 6AZ300400, 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $58,433 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.303, the District is required to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, 2 CFR §200.439 requires capital expenditures for special purpose equipment with a unit cost of $5,000 or more to have the prior written approval of the Federal awarding agency or pass‐through entity. This includes ensuring a Capital Expenditure Pre‐Approval Request Form is submitted to Arizona Department of Education (ADE) for approval prior to purchasing equipment that is not included on ADE's Food and Nutrition Service approved equipment list. Condition The District did not submit a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing equipment items not on the ADE Pre‐Approved Capital Equipment list. Cause The District was unaware that it was required to get pre‐approval from ADE for this type of purchase. Effect The District charged unallowable costs to the program. Context The District purchased two software systems related to the CNC POS for $20,920 and $29,692, and one garbage disposal for $7,821, without submitting a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing items not on the ADE Pre‐Approved Capital Equipment list. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Management should review all transactions to ensure that program costs are allowable and in adherence to applicable federal requirements. Views of Responsible Officials See Corrective Action Plan.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2024-002: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Name: Elementary and Secondary School Emergency Relief II (ESSER II) Fund Assistance Listing Number: 84.425 Pass-Through Agency: California Department of Education (CDE) Federal Agency: U.S. Department of Education Criteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity. Condition: Through testing of a representative sample of ESF expenditures, we noted that the equipment expenditures with Data Impressions in the amount totaling $617,023, did not appear to be pre-approved by the California Department of Education (CDE). Context: The condition was identified through the testing of ESF expenditures. Cause: District oversight. Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency. Questioned Costs: $617,023. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital purchases from the Education Stabilization Fund in excess of $5,000. Views of Responsible Officials: See Corrective Action Plan on following page.
Finding 2024-002: Allowable Costs - Capital Expenditures (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criteria: The Uniform Guidance, specifically 2 CFR 200.439(b)(1), notes that capital expenditures for general purpose equipment, buildings and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity. Condition: The Organization did not obtain prior written approval from the granting agency for a vehicle purchased during the year ended June 30, 2024. Cause: The Organization received verbal approval during a call with the granting agency two months before the purchase was made, and had email correspondence with the granting agency discussing the process of allocating a portion of the total vehicle cost to the program. However, there was no prior written approval allowing the vehicle purchase to be allocated to the program. Effect or Potential Effect: The vehicle was not formally approved for purchase prior to payment, which creates the risk of the Organization being reimbursed for unallowable costs. Questioned Costs: $15,535. Context: We noted one instance where a capital expenditure allocated to the program was not supported with prior written approval. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management formally communicate with Federal granting agencies in writing to obtain prior written approval for capital expenditures that are intended to be used in a Federal program.
Finding 2024-002: Allowable Costs - Capital Expenditures (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criteria: The Uniform Guidance, specifically 2 CFR 200.439(b)(1), notes that capital expenditures for general purpose equipment, buildings and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity. Condition: The Organization did not obtain prior written approval from the granting agency for a vehicle purchased during the year ended June 30, 2024. Cause: The Organization received verbal approval during a call with the granting agency two months before the purchase was made, and had email correspondence with the granting agency discussing the process of allocating a portion of the total vehicle cost to the program. However, there was no prior written approval allowing the vehicle purchase to be allocated to the program. Effect or Potential Effect: The vehicle was not formally approved for purchase prior to payment, which creates the risk of the Organization being reimbursed for unallowable costs. Questioned Costs: $15,535. Context: We noted one instance where a capital expenditure allocated to the program was not supported with prior written approval. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management formally communicate with Federal granting agencies in writing to obtain prior written approval for capital expenditures that are intended to be used in a Federal program.