Finding 1117301 (2024-001)

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 AMERICAN RESCUE PLAN - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425U PASS-THROUGH NUMBER 1402 AUDIT PERIOD - YEAR ENDED JUNE 30, 2024 Allowable Costs/Costs Principles Criteria or specific requirement: Purchases of equipment and other capital expenditures require the prior written approval of the Federal awarding agency or pass-through entity, as specified in Office of Management and Budget (OMB) 2 CFR Section 200.439. Condition: The District did not obtain prior approval from the Arkansas Division of Elementary and Secondary Education (DESE) for the purchase/installation of HVAC units for the central cafeteria project totaling $24,018 paid from the COVID-19 Education Stabilization Fund. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $24,018 were paid from COVID-19-Education Stabilization Fund. Questioned costs: The amount of questioned costs was $24,018. Context: An examination of 11 checks (totaling $734,487) from a population of 15 checks (totaling $1,190,357). Identification as a repeat finding: No Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: At the time of the purchase for this particular building, the district had several prior approval applications for HVAC replacement submitted to DESE for approval. We believe this one had been submitted as well but was unable to confirm that with DESE. In the future, we will develop a better checklist for items submitted to DESE for prior approvals so nothing is overlooked.