U.S. DEPARTMENT OF EDUCATION PASSED THROUGH THE ARKANSAS DEPARTMENT OF EDUCATION COVID-19 - AMERICAN RESCUE PLAN - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425U PASS-THROUGH NUMBER 7009 AUDIT PERIOD - YEAR ENDED JUNE 30, 2023 2023-002 Allowable Costs/Cost Principles Criteria or specific requirement: Purchase 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: In our test of expenditures from the COVID-19 Education Stabilization Fund, we identified two equipment purchases with unit costs greater than the $5,000 threshold for which the District did not obtain prior written approval from the Arkansas Division of Elementary and Secondary Education (DESE). These purchases had a total cost of $10,400. Cause: Lack of Internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $10,400 were paid from the COVID-19 - Education Stabilization Fund. Questioned costs: The amount of questioned costs were $10,400. Context: We examined all capital expenditures of the COVID-19 - Education Stabilization Fund totaling $68,927. 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: The District will communicate with the team at DESE to determine what is needed to bring all files current. The District understands fully that all state and federal spending must follow guidelines set forth in the grant or amount allocated. Accounts payable will not release funds until all guidelines and documents are secured and attached to the Purchase Card of Purchase Order form. The District will conduct a training to inform supervisors what forms and guidelines are required prior to the release of any monies.
U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425D PASS-THROUGH NUMBER 5106 AUDIT PERIOD - YEAR ENDED JUNE 30, 2023 2023-002.Allowable Costs/Cost 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: During our examination of expenditures, we identified four capital expenditures totaling $34,957 paid from the COVID-19 Education Stabilization Fund in which the District did not obtain prior written approval from the Arkansas Division of Elementary and Secondary Education (DESE). These capital expenditures included gymnasium windows ($20,259) and consultation for projects in which the District did not proceed with, including restroom renovations ($8,378) and an agricultural barn ($6,320). Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Questioned costs of $34,957 were paid from COVID-19-Education Stabilization Fund. Questioned costs: Total questioned costs of $34,957 Context: All capital expenditures were examined totaling $97,536. 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: The District will contact the Division of Elementary and Secondary Education (DESE) for guidance regarding this matter. The District will follow the guidance from DESE to ensure compliance with federal regulations and commissioners memos to ensure the District follows allowable costs and principles. Further, the partnership DMJ now has with the Arkansas Public School Resource Center (APSRC) will help establish proper internal controls and management over program expenditures.
Federal Agency: U.S. Department of Education Pass-through Entity: California Department of Education Federal Program: Education Stabilization Fund (ESF) ALN: 84.425D & 84.425U (FY 2022-2023) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency and Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title 2, 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 pass- through 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 $33,200 in capital expenditures charged to ESF that was not preapproved by CDE. Questioned Costs A total of $33,200 in questioned costs were noted based on the condition identified. Context The condition was identified as a result of our review and testing of expenditures charged to various ESF programs. 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). Cause The cause appears to be attribute to the District’s improper monitoring and lack of knowledge over this specific compliance requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Repeat Finding No. 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 District will ensure that all proposed capital expenditures originating from any Federal sources that are in excess of $5,000 are pre-approved by CDE prior to executing the proposed transaction.
Federal Agency: U.S. Department of Education Pass-through Entity: California Department of Education Federal Program: Education Stabilization Fund (ESF) ALN: 84.425D & 84.425U (FY 2022-2023) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency and Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title 2, 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 pass- through 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 $33,200 in capital expenditures charged to ESF that was not preapproved by CDE. Questioned Costs A total of $33,200 in questioned costs were noted based on the condition identified. Context The condition was identified as a result of our review and testing of expenditures charged to various ESF programs. 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). Cause The cause appears to be attribute to the District’s improper monitoring and lack of knowledge over this specific compliance requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Repeat Finding No. 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 District will ensure that all proposed capital expenditures originating from any Federal sources that are in excess of $5,000 are pre-approved by CDE prior to executing the proposed transaction.
Federal Agency: U.S. Department of Education Pass-through Entity: California Department of Education Federal Program: Education Stabilization Fund (ESF) ALN: 84.425D & 84.425U (FY 2022-2023) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency and Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title 2, 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 pass- through 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 $33,200 in capital expenditures charged to ESF that was not preapproved by CDE. Questioned Costs A total of $33,200 in questioned costs were noted based on the condition identified. Context The condition was identified as a result of our review and testing of expenditures charged to various ESF programs. 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). Cause The cause appears to be attribute to the District’s improper monitoring and lack of knowledge over this specific compliance requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Repeat Finding No. 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 District will ensure that all proposed capital expenditures originating from any Federal sources that are in excess of $5,000 are pre-approved by CDE prior to executing the proposed transaction.
Federal Agency: U.S. Department of Education Pass-through Entity: California Department of Education Federal Program: Education Stabilization Fund (ESF) ALN: 84.425D & 84.425U (FY 2022-2023) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency and Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title 2, 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 pass- through 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 $33,200 in capital expenditures charged to ESF that was not preapproved by CDE. Questioned Costs A total of $33,200 in questioned costs were noted based on the condition identified. Context The condition was identified as a result of our review and testing of expenditures charged to various ESF programs. 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). Cause The cause appears to be attribute to the District’s improper monitoring and lack of knowledge over this specific compliance requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Repeat Finding No. 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 District will ensure that all proposed capital expenditures originating from any Federal sources that are in excess of $5,000 are pre-approved by CDE prior to executing the proposed transaction.
Federal Agency: U.S. Department of Education Pass-through Entity: California Department of Education Federal Program: Education Stabilization Fund (ESF) ALN: 84.425D & 84.425U (FY 2022-2023) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency and Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title 2, 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 pass- through 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 $33,200 in capital expenditures charged to ESF that was not preapproved by CDE. Questioned Costs A total of $33,200 in questioned costs were noted based on the condition identified. Context The condition was identified as a result of our review and testing of expenditures charged to various ESF programs. 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). Cause The cause appears to be attribute to the District’s improper monitoring and lack of knowledge over this specific compliance requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Repeat Finding No. 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 District will ensure that all proposed capital expenditures originating from any Federal sources that are in excess of $5,000 are pre-approved by CDE prior to executing the proposed transaction.
Federal Agency: U.S. Department of Education Pass-through Entity: California Department of Education Federal Program: Education Stabilization Fund (ESF) ALN: 84.425D & 84.425U (FY 2022-2023) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency and Non-Compliance Criteria or Specific Requirements The Code of Federal Regulations, Title 2, 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 pass- through 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 $33,200 in capital expenditures charged to ESF that was not preapproved by CDE. Questioned Costs A total of $33,200 in questioned costs were noted based on the condition identified. Context The condition was identified as a result of our review and testing of expenditures charged to various ESF programs. 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). Cause The cause appears to be attribute to the District’s improper monitoring and lack of knowledge over this specific compliance requirement. Additionally, a contributing factor appears to be a turnover in a key position that provides oversight for this program. Repeat Finding No. 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 District will ensure that all proposed capital expenditures originating from any Federal sources that are in excess of $5,000 are pre-approved by CDE prior to executing the proposed transaction.
2 CFR § 200.439(b)(1) states that 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 pass-through entity. Further, 2 CFR § 200.439(b)(2) states that capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR § 200.439(b)(3) states, in part, that capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency, or pass-through entity. 2 CFR § 200.421(e)(3) states, in part, that unallowable advertising and public relations costs include the costs of promotional items and memorabilia, including models, gifts, and souvenirs. Additionally, the federal grant agreement states, in part, that all construction and other capital expenditures/improvements supported with federal funds must be pre-approved by the Ohio Department of Education through the CCIP Application Process. Construction means (A) the preparation of drawings and specifications for school facilities; (B) erecting, building, acquiring, altering, remodeling, repairing, or extending school facilities; and (C) inspecting and supervising the construction of school facilities. Capital expenditures means expenditures to acquire capital assets (i.e., land, facilities, or equipment over $5,000 per unit) or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life. During our testing of the ESSER Federal grant monies, we sampled 60 non-payroll transactions totaling $923,224 and two individually important items totaling $372,000. We noted the following exceptions: • 18 out of 60 transactions totaling $344,620 and one out of two individually important items totally $198,000 were not allowable per the programmatic requirements listed above. These noncompliant expenditures resulted in a projected noncompliant amount of $1,168,544. • One of the above expenditures is unallowable per the Federal grant agreement and per CFR § 200.421(e)(3) which was for the purchase of new hire t-shirts in the amount of $288; and • Seventeen of the above expenditures and one individually important item were for the purchase of various capital expenditures (the Patterson Field project, scoreboard, gym floor resurfacing, electrical repairs, garage roof repairs, gymnasium sound system, boiler repairs, security cameras, riding floor scrubber, copiers, a tractor, classroom expansion project and an ice machine) which were unallowable per the Federal grant agreement and 2 CFR § 200.439(b)(1), 2 CFR § 200.439(b)(2), and 2 CFR § 200.439(b)(3). The unallowable activities/costs paid with these Federal grant monies is in excess of $25,000 and therefore considered questioned costs under 2 CFR § 200.516. District management should review all grant award documents in order to execute policies and procedures which help ensure compliance with grant requirements. The District should thoroughly review all grant documentation to ensure all expenditures spent using Federal funds are in compliance with requirements.
2 CFR § 200.439(b)(1) states that 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 pass-through entity. Further, 2 CFR § 200.439(b)(2) states that capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR § 200.439(b)(3) states, in part, that capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency, or pass-through entity. 2 CFR § 200.421(e)(3) states, in part, that unallowable advertising and public relations costs include the costs of promotional items and memorabilia, including models, gifts, and souvenirs. Additionally, the federal grant agreement states, in part, that all construction and other capital expenditures/improvements supported with federal funds must be pre-approved by the Ohio Department of Education through the CCIP Application Process. Construction means (A) the preparation of drawings and specifications for school facilities; (B) erecting, building, acquiring, altering, remodeling, repairing, or extending school facilities; and (C) inspecting and supervising the construction of school facilities. Capital expenditures means expenditures to acquire capital assets (i.e., land, facilities, or equipment over $5,000 per unit) or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life. During our testing of the ESSER Federal grant monies, we sampled 60 non-payroll transactions totaling $923,224 and two individually important items totaling $372,000. We noted the following exceptions: • 18 out of 60 transactions totaling $344,620 and one out of two individually important items totally $198,000 were not allowable per the programmatic requirements listed above. These noncompliant expenditures resulted in a projected noncompliant amount of $1,168,544. • One of the above expenditures is unallowable per the Federal grant agreement and per CFR § 200.421(e)(3) which was for the purchase of new hire t-shirts in the amount of $288; and • Seventeen of the above expenditures and one individually important item were for the purchase of various capital expenditures (the Patterson Field project, scoreboard, gym floor resurfacing, electrical repairs, garage roof repairs, gymnasium sound system, boiler repairs, security cameras, riding floor scrubber, copiers, a tractor, classroom expansion project and an ice machine) which were unallowable per the Federal grant agreement and 2 CFR § 200.439(b)(1), 2 CFR § 200.439(b)(2), and 2 CFR § 200.439(b)(3). The unallowable activities/costs paid with these Federal grant monies is in excess of $25,000 and therefore considered questioned costs under 2 CFR § 200.516. District management should review all grant award documents in order to execute policies and procedures which help ensure compliance with grant requirements. The District should thoroughly review all grant documentation to ensure all expenditures spent using Federal funds are in compliance with requirements.
4. Capital Expenditures Finding Number: 2023-009 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Equipment And Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance, Material Weakness, and Questioned Cost 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.439 which states, in part, that capital expenditures for general purpose equipment, buildings and land and improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency or pass-through entity. The District expended $412,699 of its American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) AL number 84.425U federal grant funds for roof replacements and a bathroom renovation. The School District failed to have this capital expenditure pre-approved by the pass-through entity Ohio Department of Education and Workforce for the 2023 grant year due to a misunderstanding of requirements. Therefore, we consider the amount of $412,699 to be a questioned cost. Failure to obtain proper pre-approval for capital expenditures could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce.
4. Capital Expenditures Finding Number: 2023-009 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Equipment And Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance, Material Weakness, and Questioned Cost 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.439 which states, in part, that capital expenditures for general purpose equipment, buildings and land and improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency or pass-through entity. The District expended $412,699 of its American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) AL number 84.425U federal grant funds for roof replacements and a bathroom renovation. The School District failed to have this capital expenditure pre-approved by the pass-through entity Ohio Department of Education and Workforce for the 2023 grant year due to a misunderstanding of requirements. Therefore, we consider the amount of $412,699 to be a questioned cost. Failure to obtain proper pre-approval for capital expenditures could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce.
4. Capital Expenditures Finding Number: 2023-009 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Equipment And Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance, Material Weakness, and Questioned Cost 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.439 which states, in part, that capital expenditures for general purpose equipment, buildings and land and improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency or pass-through entity. The District expended $412,699 of its American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) AL number 84.425U federal grant funds for roof replacements and a bathroom renovation. The School District failed to have this capital expenditure pre-approved by the pass-through entity Ohio Department of Education and Workforce for the 2023 grant year due to a misunderstanding of requirements. Therefore, we consider the amount of $412,699 to be a questioned cost. Failure to obtain proper pre-approval for capital expenditures could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce.
4. Capital Expenditures Finding Number: 2023-009 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Equipment And Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance, Material Weakness, and Questioned Cost 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.439 which states, in part, that capital expenditures for general purpose equipment, buildings and land and improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency or pass-through entity. The District expended $412,699 of its American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) AL number 84.425U federal grant funds for roof replacements and a bathroom renovation. The School District failed to have this capital expenditure pre-approved by the pass-through entity Ohio Department of Education and Workforce for the 2023 grant year due to a misunderstanding of requirements. Therefore, we consider the amount of $412,699 to be a questioned cost. Failure to obtain proper pre-approval for capital expenditures could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce.
4. Capital Expenditures Finding Number: 2023-009 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Equipment And Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance, Material Weakness, and Questioned Cost 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.439 which states, in part, that capital expenditures for general purpose equipment, buildings and land and improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency or pass-through entity. The District expended $412,699 of its American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) AL number 84.425U federal grant funds for roof replacements and a bathroom renovation. The School District failed to have this capital expenditure pre-approved by the pass-through entity Ohio Department of Education and Workforce for the 2023 grant year due to a misunderstanding of requirements. Therefore, we consider the amount of $412,699 to be a questioned cost. Failure to obtain proper pre-approval for capital expenditures could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce.
Finding Number: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Federal Agency: Department of Agriculture Federal Award Number: 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $142,860 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 walk‐in freezers for $71,430 each, 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: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Federal Agency: Department of Agriculture Federal Award Number: 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $142,860 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 walk‐in freezers for $71,430 each, 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: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Federal Agency: Department of Agriculture Federal Award Number: 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $142,860 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 walk‐in freezers for $71,430 each, 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: 2023‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Federal Agency: Department of Agriculture Federal Award Number: 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $142,860 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 walk‐in freezers for $71,430 each, 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 #2023-001: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief II (ESSER II) Fund, Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Emergency Needs, and Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Learning Loss 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 classroom projector project did not appear to be pre-approved by the California Department of Education (CDE). Each purchase order provided for the purchase and installation of classroom projectors with a per unit cost in excess of $5,000 (including installation and other ancillary costs). 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: $718,634 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 #2023-001: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief II (ESSER II) Fund, Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Emergency Needs, and Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Learning Loss 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 classroom projector project did not appear to be pre-approved by the California Department of Education (CDE). Each purchase order provided for the purchase and installation of classroom projectors with a per unit cost in excess of $5,000 (including installation and other ancillary costs). 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: $718,634 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 #2023-001: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief II (ESSER II) Fund, Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Emergency Needs, and Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Learning Loss 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 classroom projector project did not appear to be pre-approved by the California Department of Education (CDE). Each purchase order provided for the purchase and installation of classroom projectors with a per unit cost in excess of $5,000 (including installation and other ancillary costs). 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: $718,634 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 #2023-001: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief II (ESSER II) Fund, Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Emergency Needs, and Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Learning Loss 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 classroom projector project did not appear to be pre-approved by the California Department of Education (CDE). Each purchase order provided for the purchase and installation of classroom projectors with a per unit cost in excess of $5,000 (including installation and other ancillary costs). 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: $718,634 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 #2023-001: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief II (ESSER II) Fund, Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Emergency Needs, and Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Learning Loss 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 classroom projector project did not appear to be pre-approved by the California Department of Education (CDE). Each purchase order provided for the purchase and installation of classroom projectors with a per unit cost in excess of $5,000 (including installation and other ancillary costs). 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: $718,634 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 #2023-001: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief II (ESSER II) Fund, Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Emergency Needs, and Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Learning Loss 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 classroom projector project did not appear to be pre-approved by the California Department of Education (CDE). Each purchase order provided for the purchase and installation of classroom projectors with a per unit cost in excess of $5,000 (including installation and other ancillary costs). 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: $718,634 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 #2023-001: EDUCATION STABILIZATION FUNDS – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief II (ESSER II) Fund, Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Emergency Needs, and Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Learning Loss 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 classroom projector project did not appear to be pre-approved by the California Department of Education (CDE). Each purchase order provided for the purchase and installation of classroom projectors with a per unit cost in excess of $5,000 (including installation and other ancillary costs). 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: $718,634 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.
CONDITION: The Northern Cambria School District contracted with two (2) third-party vendors - Eber HVAC, Inc. for the RTU Replacement Project and Advanced Office Systems, Inc. for the purchase of copier equipment, which constitute construction-related and capital purchases respectively which require prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for these expenditures. 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 and copier equipment. 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: $1,501,951 (Eber HVAC-$1,475,100) (Advanced Office Systems-$26,851) 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 with two (2) third-party vendors - Eber HVAC, Inc. for the RTU Replacement Project and Advanced Office Systems, Inc. for the purchase of copier equipment, which constitute construction-related and capital purchases respectively which require prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for these expenditures. 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 and copier equipment. 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: $1,501,951 (Eber HVAC-$1,475,100) (Advanced Office Systems-$26,851) 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 with two (2) third-party vendors - Eber HVAC, Inc. for the RTU Replacement Project and Advanced Office Systems, Inc. for the purchase of copier equipment, which constitute construction-related and capital purchases respectively which require prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for these expenditures. 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 and copier equipment. 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: $1,501,951 (Eber HVAC-$1,475,100) (Advanced Office Systems-$26,851) 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 with two (2) third-party vendors - Eber HVAC, Inc. for the RTU Replacement Project and Advanced Office Systems, Inc. for the purchase of copier equipment, which constitute construction-related and capital purchases respectively which require prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for these expenditures. 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 and copier equipment. 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: $1,501,951 (Eber HVAC-$1,475,100) (Advanced Office Systems-$26,851) 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 with two (2) third-party vendors - Eber HVAC, Inc. for the RTU Replacement Project and Advanced Office Systems, Inc. for the purchase of copier equipment, which constitute construction-related and capital purchases respectively which require prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for these expenditures. 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 and copier equipment. 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: $1,501,951 (Eber HVAC-$1,475,100) (Advanced Office Systems-$26,851) 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 with two (2) third-party vendors - Eber HVAC, Inc. for the RTU Replacement Project and Advanced Office Systems, Inc. for the purchase of copier equipment, which constitute construction-related and capital purchases respectively which require prior approval from the Pennsylvania Department of Education (PDE). The School District did not obtain the required prior approval from PDE for these expenditures. 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 and copier equipment. 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: $1,501,951 (Eber HVAC-$1,475,100) (Advanced Office Systems-$26,851) 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).
FINDING #2023-004: EDUCATION STABILIZATION FUNDS (ESF) – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief III (ESSER III) Fund (Resource 3213) 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 used funds did not appear to be pre-approved by the California Department of Education (CDE). The District used ESF Funds to pay for a portion of their financed purchase agreement for solar. The District did not receive pre-approval to utilize the funds in this way. In addition, multi-year payment contracts must all occur within the grant period, of which requires funds to be obligated by September 30, 2024. The payment schedule for the financed purchase agreement exceeds the grant period. 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: $240,801. This is the total of the solar financed purchase agreement payments charged to Resource 3213 during the 2022-23 year. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital expenditure purchases from the Education Stabilization Fund in excess of $5,000 for capital projects. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2023-004: EDUCATION STABILIZATION FUNDS (ESF) – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief III (ESSER III) Fund (Resource 3213) 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 used funds did not appear to be pre-approved by the California Department of Education (CDE). The District used ESF Funds to pay for a portion of their financed purchase agreement for solar. The District did not receive pre-approval to utilize the funds in this way. In addition, multi-year payment contracts must all occur within the grant period, of which requires funds to be obligated by September 30, 2024. The payment schedule for the financed purchase agreement exceeds the grant period. 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: $240,801. This is the total of the solar financed purchase agreement payments charged to Resource 3213 during the 2022-23 year. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital expenditure purchases from the Education Stabilization Fund in excess of $5,000 for capital projects. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2023-004: EDUCATION STABILIZATION FUNDS (ESF) – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief III (ESSER III) Fund (Resource 3213) 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 used funds did not appear to be pre-approved by the California Department of Education (CDE). The District used ESF Funds to pay for a portion of their financed purchase agreement for solar. The District did not receive pre-approval to utilize the funds in this way. In addition, multi-year payment contracts must all occur within the grant period, of which requires funds to be obligated by September 30, 2024. The payment schedule for the financed purchase agreement exceeds the grant period. 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: $240,801. This is the total of the solar financed purchase agreement payments charged to Resource 3213 during the 2022-23 year. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital expenditure purchases from the Education Stabilization Fund in excess of $5,000 for capital projects. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2023-004: EDUCATION STABILIZATION FUNDS (ESF) – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief III (ESSER III) Fund (Resource 3213) 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 used funds did not appear to be pre-approved by the California Department of Education (CDE). The District used ESF Funds to pay for a portion of their financed purchase agreement for solar. The District did not receive pre-approval to utilize the funds in this way. In addition, multi-year payment contracts must all occur within the grant period, of which requires funds to be obligated by September 30, 2024. The payment schedule for the financed purchase agreement exceeds the grant period. 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: $240,801. This is the total of the solar financed purchase agreement payments charged to Resource 3213 during the 2022-23 year. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital expenditure purchases from the Education Stabilization Fund in excess of $5,000 for capital projects. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2023-004: EDUCATION STABILIZATION FUNDS (ESF) – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief III (ESSER III) Fund (Resource 3213) 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 used funds did not appear to be pre-approved by the California Department of Education (CDE). The District used ESF Funds to pay for a portion of their financed purchase agreement for solar. The District did not receive pre-approval to utilize the funds in this way. In addition, multi-year payment contracts must all occur within the grant period, of which requires funds to be obligated by September 30, 2024. The payment schedule for the financed purchase agreement exceeds the grant period. 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: $240,801. This is the total of the solar financed purchase agreement payments charged to Resource 3213 during the 2022-23 year. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital expenditure purchases from the Education Stabilization Fund in excess of $5,000 for capital projects. Views of Responsible Officials: See Corrective Action Plan on following page.
FINDING #2023-004: EDUCATION STABILIZATION FUNDS (ESF) – EQUIPMENT AND OTHER CAPITAL EXPENDITURES (50000) Program Names: Elementary and Secondary School Emergency Relief III (ESSER III) Fund (Resource 3213) 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 used funds did not appear to be pre-approved by the California Department of Education (CDE). The District used ESF Funds to pay for a portion of their financed purchase agreement for solar. The District did not receive pre-approval to utilize the funds in this way. In addition, multi-year payment contracts must all occur within the grant period, of which requires funds to be obligated by September 30, 2024. The payment schedule for the financed purchase agreement exceeds the grant period. 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: $240,801. This is the total of the solar financed purchase agreement payments charged to Resource 3213 during the 2022-23 year. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the District obtain prior approval from CDE for all capital expenditure purchases from the Education Stabilization Fund in excess of $5,000 for capital projects. Views of Responsible Officials: See Corrective Action Plan on following page.
Criteria: An entity should have adequate controls in place to ensure that costs included in federal grant reimbursement requests are allowable under the terms of the award. Condition and Context: During our review of allowable costs for the year ended June 30, 2023, we noted certain capital expenditures that were not approved in writing by the federal awarding agency or the pass-through entity as required by the cost principles outlined in 2 CFR 200.439. Questioned Costs: $26,566 Cause: Management oversight Effect: The Organization may receive reimbursements through federal programs for which it is not entitled. Repeat Finding: No Recommendation: Reinforce controls to ensure all project invoices including capital expenditures are reviewed and that only eligible costs are reported under the federal award, or that prior authorization by the federal awarding agency or pass-through entity is obtained when required. Views of Management: Management agrees with the finding and is implementing procedures that are further discussed in the corrective action plan. See Corrective Action Plan.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of Equipment/Real Property Management. 2 CFR Part 200.439 specifies capital expenditures are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR Part 200.303 requires the District establish and maintain effective internal controls over the Federal award to ensure compliance with those provisions. Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure construction related expenditures had prior approval from the pass-through entity for one out of the five construction related expenditures tested. Questioned costs: $145,718. Context: There were a total of five construction related expenditure projects charged to the federal program totaling $1,869,807 and all five were tested of which one project totaling $145,718 did not have the required prior approval from the pass-through entity. Cause: The District had turnover in the facilities department and this step was missed on one of the expenditures. Effect: The District did not obtain the prior approval from the pass-through entity on one of the construction related expenditure projects and resulting in noncompliance. Repeat Finding: No. Recommendation: We recommend the District design procedures and controls to ensure adequate prior approval of construction related expenditures charged to the Education Stabilization Fund program. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of Equipment/Real Property Management. 2 CFR Part 200.439 specifies capital expenditures are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR Part 200.303 requires the District establish and maintain effective internal controls over the Federal award to ensure compliance with those provisions. Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure construction related expenditures had prior approval from the pass-through entity for one out of the five construction related expenditures tested. Questioned costs: $145,718. Context: There were a total of five construction related expenditure projects charged to the federal program totaling $1,869,807 and all five were tested of which one project totaling $145,718 did not have the required prior approval from the pass-through entity. Cause: The District had turnover in the facilities department and this step was missed on one of the expenditures. Effect: The District did not obtain the prior approval from the pass-through entity on one of the construction related expenditure projects and resulting in noncompliance. Repeat Finding: No. Recommendation: We recommend the District design procedures and controls to ensure adequate prior approval of construction related expenditures charged to the Education Stabilization Fund program. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of Equipment/Real Property Management. 2 CFR Part 200.439 specifies capital expenditures are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR Part 200.303 requires the District establish and maintain effective internal controls over the Federal award to ensure compliance with those provisions. Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure construction related expenditures had prior approval from the pass-through entity for one out of the five construction related expenditures tested. Questioned costs: $145,718. Context: There were a total of five construction related expenditure projects charged to the federal program totaling $1,869,807 and all five were tested of which one project totaling $145,718 did not have the required prior approval from the pass-through entity. Cause: The District had turnover in the facilities department and this step was missed on one of the expenditures. Effect: The District did not obtain the prior approval from the pass-through entity on one of the construction related expenditure projects and resulting in noncompliance. Repeat Finding: No. Recommendation: We recommend the District design procedures and controls to ensure adequate prior approval of construction related expenditures charged to the Education Stabilization Fund program. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of Equipment/Real Property Management. 2 CFR Part 200.439 specifies capital expenditures are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR Part 200.303 requires the District establish and maintain effective internal controls over the Federal award to ensure compliance with those provisions. Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure construction related expenditures had prior approval from the pass-through entity for one out of the five construction related expenditures tested. Questioned costs: $145,718. Context: There were a total of five construction related expenditure projects charged to the federal program totaling $1,869,807 and all five were tested of which one project totaling $145,718 did not have the required prior approval from the pass-through entity. Cause: The District had turnover in the facilities department and this step was missed on one of the expenditures. Effect: The District did not obtain the prior approval from the pass-through entity on one of the construction related expenditure projects and resulting in noncompliance. Repeat Finding: No. Recommendation: We recommend the District design procedures and controls to ensure adequate prior approval of construction related expenditures charged to the Education Stabilization Fund program. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of Equipment/Real Property Management. 2 CFR Part 200.439 specifies capital expenditures are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR Part 200.303 requires the District establish and maintain effective internal controls over the Federal award to ensure compliance with those provisions. Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure construction related expenditures had prior approval from the pass-through entity for one out of the five construction related expenditures tested. Questioned costs: $145,718. Context: There were a total of five construction related expenditure projects charged to the federal program totaling $1,869,807 and all five were tested of which one project totaling $145,718 did not have the required prior approval from the pass-through entity. Cause: The District had turnover in the facilities department and this step was missed on one of the expenditures. Effect: The District did not obtain the prior approval from the pass-through entity on one of the construction related expenditure projects and resulting in noncompliance. Repeat Finding: No. Recommendation: We recommend the District design procedures and controls to ensure adequate prior approval of construction related expenditures charged to the Education Stabilization Fund program. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of Equipment/Real Property Management. 2 CFR Part 200.439 specifies capital expenditures are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. 2 CFR Part 200.303 requires the District establish and maintain effective internal controls over the Federal award to ensure compliance with those provisions. Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure construction related expenditures had prior approval from the pass-through entity for one out of the five construction related expenditures tested. Questioned costs: $145,718. Context: There were a total of five construction related expenditure projects charged to the federal program totaling $1,869,807 and all five were tested of which one project totaling $145,718 did not have the required prior approval from the pass-through entity. Cause: The District had turnover in the facilities department and this step was missed on one of the expenditures. Effect: The District did not obtain the prior approval from the pass-through entity on one of the construction related expenditure projects and resulting in noncompliance. Repeat Finding: No. Recommendation: We recommend the District design procedures and controls to ensure adequate prior approval of construction related expenditures charged to the Education Stabilization Fund program. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Grant Title: COVID-19 American Rescue Plan Elementary and Secondary School Emergency Relief Fund - Education Stabilization Fund (ESSER) Federal Award Number and Year: 2023 Assistance Listing #: 84.425U Federal Agency: US Department of Education Pass-through Entity number: 52 Pass-through Agency: WV Department of Education CONDITION: The Board did not ensure that equipment purchased with funds from the COVID-19 American Rescue Plan Elementary and Secondary School Emergency Relief Fund - Education Stabilization Fund (ESSER) was properly tracked through an inventory list. In addition, the Board was unable to provide evidence of prior written approval for a construction project. CONTEXT: Specifically, we identified the following: Equipment purchased through a lease purchase agreement dated May 15, 2020, totaling $2,147,541, was not placed on an equipment inventory listing maintained for each school. The final lease payment of $536,829 was made during fiscal year 2023. Additional equipment, totaling $38,475, was not placed on an equipment inventory listing maintained for each school. The Board was unable to provide documentation of prior written approval from the West Virginia Department of Education for a HVAC construction project, totaling $1,777,483. CRITERIA: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Appendix XI Part 4 Section 84.425-ESF Section 1 - Elementary and Secondary Education states, in part, that: "F. Equipment/Real Property Management Any purchases with ESF funds in this category are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Part 3, Section F, "Equipment /Real Property Management" of the 2023 Compliance Supplement. Auditors should determine whether governors, SEAs, and/or subrecipients received prior approval for capital expenditures for equipment acquisition or improvements to land, buildings, or equipment. (1) For capital equipment or improvements to land, buildings, or equipment that were purchased with grant funds, the governor or SEA must receive prior approval from ED. (2) For capital equipment or improvements to land, buildings, or equipment that were purchased with grant funds, the governor or SEA pass-through agency must provide prior approval to subrecipients." Title 2 U.S. Code of Federal Regulations (CFR) Part 200.439 Equipment and other capital expenditures, states, in part, that: "(b) (1) 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 pass-through entity. "(b) (2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.313 Equipment states, in part, that: "... (d)(1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, 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 sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated." Title 7 CFR Section 3015.169 states, in part, that: "Recipient procedures for managing equipment shall, as a minimum, meet the following requirements (including replacement equipment) until such actions as transfer, replacement or disposal takes place: (a) Property records shall be maintained accurately. (Subpart D of this part contains retention and access requirements for these records.) The records shall include for each item of equipment the following: (1) A description of the equipment including manufacturer's serial numbers. (2) An identification number, such as the manufacturer's serial number. (3) Identification of the grant under which the recipient acquired the equipment. (4) The information needed to calculate the Federal share of the equipment (see § 3015.172). (5) Acquisition date and unit acquisition cost. (6) Location, use and condition of the equipment and the date the information was reported. (7) All pertinent information on the ultimate transfer, replacement, or disposal of the equipment. ... (b) Every two years, at a minimum, a physical inventory shall be conducted and the results reconciled with the property records to verify the existence, current utilization, and continued need for the equipment. Any discrepancies between quantities determined by the physical inspection and those shown in the accounting records shall be investigated to determine the causes of the differences." QUESTIONED COSTS: Unknown CAUSE: The Board did not have controls that would ensure inventory is properly tracked in accordance with all requirements of the ESSER program. Additionally, controls were not in place to track purchases of equipment. Also, the Board did not have controls in place to ensure that proper written approval was obtained in advance of starting a construction project. EFFECT: The Board did not properly track all equipment on an inventory list. Additionally, documentation was not available to verify compliance with requirements for approval of capital expenditures. This issue contributed to the disclaimer of opinion for the ESSER program. REPEAT FINDING: No RECOMMENDATION: The Upshur County Board of Education should establish and follow policies and procedures that will ensure compliance with requirements of the United States Department of Education's equipment management requirements and the requirements applicable to the ESSER program. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: The Board will establish procedures that will ensure compliance with requirements of the United States Department of Education's equipment management requirements applicable to the ESSER program.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context For the Child Nutrition Cluster, the reimbursement for meals served is not based on costs; it is determined solely by applying the applicable meals rates formula. However, the School Corporation can use its entire reimbursement payment for any combination of allowable operating and administrative costs. All expenditures from the reimbursement payment must also be reasonable and allocable. The purchase of capital expenditures, those expenditures which are over $5,000 or more for an item that is to be used for general purposes for multiple years, must have approval by the Indiana Department of Education (IDOE) prior to purchase. In fiscal year 2022-2023, the School Corporation purchased two pieces of equipment, each over $5,000, without approval from the IDOE. The first piece of equipment was a liftgate in the amount of $6,906, and the second piece of equipment was a vehicle in the amount of $7,500. The total amount of $14,406 was considered questioned costs. In addition, the School Corporation did not have an allowable costs policy outlining the School Corporation's processes and policies with regards to costs charged to federal grants. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.439(b) states in part: "The following rule of allowability must apply to equipment and other capital expenditures: . . . (2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, equipment was purchased without prior approval from the IDOE. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Questioned costs in the amount of $14,406 were identified as noted in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that equipment purchased over $5,000 is approved by the IDOE prior to purchase. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context For the Child Nutrition Cluster, the reimbursement for meals served is not based on costs; it is determined solely by applying the applicable meals rates formula. However, the School Corporation can use its entire reimbursement payment for any combination of allowable operating and administrative costs. All expenditures from the reimbursement payment must also be reasonable and allocable. The purchase of capital expenditures, those expenditures which are over $5,000 or more for an item that is to be used for general purposes for multiple years, must have approval by the Indiana Department of Education (IDOE) prior to purchase. In fiscal year 2022-2023, the School Corporation purchased two pieces of equipment, each over $5,000, without approval from the IDOE. The first piece of equipment was a liftgate in the amount of $6,906, and the second piece of equipment was a vehicle in the amount of $7,500. The total amount of $14,406 was considered questioned costs. In addition, the School Corporation did not have an allowable costs policy outlining the School Corporation's processes and policies with regards to costs charged to federal grants. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.439(b) states in part: "The following rule of allowability must apply to equipment and other capital expenditures: . . . (2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, equipment was purchased without prior approval from the IDOE. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Questioned costs in the amount of $14,406 were identified as noted in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that equipment purchased over $5,000 is approved by the IDOE prior to purchase. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context For the Child Nutrition Cluster, the reimbursement for meals served is not based on costs; it is determined solely by applying the applicable meals rates formula. However, the School Corporation can use its entire reimbursement payment for any combination of allowable operating and administrative costs. All expenditures from the reimbursement payment must also be reasonable and allocable. The purchase of capital expenditures, those expenditures which are over $5,000 or more for an item that is to be used for general purposes for multiple years, must have approval by the Indiana Department of Education (IDOE) prior to purchase. In fiscal year 2022-2023, the School Corporation purchased two pieces of equipment, each over $5,000, without approval from the IDOE. The first piece of equipment was a liftgate in the amount of $6,906, and the second piece of equipment was a vehicle in the amount of $7,500. The total amount of $14,406 was considered questioned costs. In addition, the School Corporation did not have an allowable costs policy outlining the School Corporation's processes and policies with regards to costs charged to federal grants. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.439(b) states in part: "The following rule of allowability must apply to equipment and other capital expenditures: . . . (2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, equipment was purchased without prior approval from the IDOE. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Questioned costs in the amount of $14,406 were identified as noted in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that equipment purchased over $5,000 is approved by the IDOE prior to purchase. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context For the Child Nutrition Cluster, the reimbursement for meals served is not based on costs; it is determined solely by applying the applicable meals rates formula. However, the School Corporation can use its entire reimbursement payment for any combination of allowable operating and administrative costs. All expenditures from the reimbursement payment must also be reasonable and allocable. The purchase of capital expenditures, those expenditures which are over $5,000 or more for an item that is to be used for general purposes for multiple years, must have approval by the Indiana Department of Education (IDOE) prior to purchase. In fiscal year 2022-2023, the School Corporation purchased two pieces of equipment, each over $5,000, without approval from the IDOE. The first piece of equipment was a liftgate in the amount of $6,906, and the second piece of equipment was a vehicle in the amount of $7,500. The total amount of $14,406 was considered questioned costs. In addition, the School Corporation did not have an allowable costs policy outlining the School Corporation's processes and policies with regards to costs charged to federal grants. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.439(b) states in part: "The following rule of allowability must apply to equipment and other capital expenditures: . . . (2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, equipment was purchased without prior approval from the IDOE. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Questioned costs in the amount of $14,406 were identified as noted in the Condition and Context. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that equipment purchased over $5,000 is approved by the IDOE prior to purchase. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.