Finding Text
Significant Deficiency
2024-001. Equipment and Real Property Management
United States Department of Education, passed through New York State Department of Education:
Education Stabilization Fund
COVID-19: Governor's Emergency Education Relief Fund ALN: 84.425C
COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D
COVID-19: American Rescue Plan – Elementary and Secondary School
Emergency Relief ALN: 84.425U
COVID-19: American Rescue Plan – Elementary and Secondary School
Emergency Relief – Homeless Youth and Children ALN: 84.425W
Condition: The District did not include the capital expenditures for the “Unit Ventilators Replacement Project” paid with CRRSA ESSER 2 funds in its current year’s capital assets inventory record.
Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years.
Cause: The District recorded expenditures relating to the “Unit Ventilators Replacement Project” as purchased services instead of equipment based on instructions from the pass-through agency. As a result, the District did not identify these capital expenditures as capital assets that should be added to the capital assets inventory listing.
Effect: The failure to include capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for assets inventory management and the subsequent disposal of those capital assets.
Questioned Costs: None reported.
Context: The District uses specific expenditure codes in its special aid fund to identify and track various categories of expenditures incurred that are reimbursable under various federal grants, including the CRRSA ESSER 2 grant award. The District was instructed by the New York State Education Department to include its unit ventilators replacement project costs in the District’s CRRSA ESSER 2 budget application as purchased services instead of equipment; thus, the District recorded the expenditures for the unit ventilators replacement project in a contractual expenditures object code (.400) instead of the standard expenditure object code (.200) for equipment purchases. As a result, when District personnel performed the annual review of the equipment expenditure codes of the District’s governmental funds to compile the listing of equipment additions during the year to update its capital assets inventory record, the cost of the unit ventilators replacement project was not included.
Identification of a Repeat Finding: This is not a repeat finding.
Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital expenditures purchased with federal funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records.
Views of Responsible Officials of Auditee: Management agrees with the finding. The District’s Assistant Superintendent for Business and Operations will review and update the existing procedures relating to the recording and tracking of capital assets purchased with federal funds.