Finding 1080019 (2023-001)

FA 2023-001 Strengthen Controls over Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: Federal Communications Commission Pass-Through Entity: Direct Assistance Listing Number and Title: COVID-19 – 32.009 – Emergency Connectivity Fund Program Federal Award Number: N/A Questioned Costs: $258,004.80 Repeat of Prior Year Finding: FA 2022-01 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Emergency Connectivity Fund program. Background: Congress established the Emergency Connectivity Fund (ECF) through section 7402 of the American Rescue Plan Act of 2021, and appropriated $7.171 billion for the purchase of eligible equipment, advanced telecommunications, and information services for use by students, school staff, and library patrons at locations that include locations other than at a school or library. The ECF Program provides funding to meet the remote learning needs of students, school staff, and library patrons who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning during the COVID-19 emergency period. Eligible program applicants submit the ECF Federal Communications Commission (FCC) Form 471 application, which must, then, be approved by the FCC, to receive funding. ECF funding totaling $1,169,559.76 was granted to the Telfair County Board of Education (School District). During fiscal year 2022, ECF funds totaling $911,554.96 were expended and reported on the School District’s Schedule of Expenditures of Federal Awards (SEFA). During fiscal year 2023, ECF funds totaling $258,004.80 were expended and reported on the School District’s Schedule of Expenditures of Federal Awards (SEFA); therefore, no additional funds are available for expenditure in future fiscal years. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Pursuant to Title 47 CFR Section 54.171(a)(1)(vi), “the school, library, or consortia listed on the FCC Form 471 application has complied with all applicable state, local, or Tribal local laws regarding procurement of services for which support is being sought.” Additionally, the suspension and debarment rules reflected within Title 47 CFR Section 8 are also applicable to the ECF Program. Condition: As part of our fiscal year 2023 audit, we followed up on the School District’s efforts to implement corrective action plans in response to the prior year finding in which we reported that the School District did not have adequate internal controls over expenditures associated with the ECF program. Therefore, auditors performed a review of all current period expenditure activity associated with the ECF program. The following deficiencies were identified: • A purchase order or other record of supervisory review and approval could not be provided for one expenditure totaling $258,004.80. • Documentation was not maintained to evidence that appropriate bidding procedures were used to select vendors for the goods and services purchased with ECF funding as is required by the School District’s internal purchasing policy. Questioned Costs: Known questioned costs of $258,004.80 were identified for expenditures that did not follow the School District’s purchasing policies and procedures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per discussion with management, this federal program was new and unfamiliar to the School District. Vendors were paid directly by the Federal Communications Commission, rather than by the School District. Since the School District did not directly pay for or seek reimbursement for the items, they did not feel as if federal procurement procedures applied in this instance. Effect: The School District is not in compliance with the Uniform Guidance or FCC guidance related to the ECF program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as the FCC may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures and ensure that Board-approved policies and procedures are followed when expending funds related to the ECF program. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s policies and procedures. Views of Responsible Officials: We concur with this finding.