Finding Text
Federal Program Information:
Funding Agency: U.S. Department of Education Title: Education Stabilization Fund
FAL Number: 84.425D,U,W
Passthrough: New Mexico Public Education Department Award Year: 2022 Criteria: §200.213 Equipment.
(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 federal award identification number), who holds title, the acquisition date, 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.
Additionally, according to grant requirements and the Compliance Supplement, when Education
Stabilization Funds are used for capital expenditures the “…subrecipient must receive prior
approval for capital expenditures for equipment acquisition or improvements to land,
buildings, or equipment.”
Condition: During our review of capital expenditures by the District, we identified the following
issues:
• The District had not properly identified all expenditures from the Education
Stabilization Fund which were for capital additions to the District’s assets. The District had
been approved for the addition of 500 Promethean boards. However, in the initial capital asset
addition detail provided to us, only $300,000 of the total costs of $2,985,480.15 had been included
on the listing.
• The District did not obtain from the New Mexico Public Education Department (NMPED) an
“Equipment >= $5,000 Preapproval to Purchase Form” for the purchase of seven Windsor 20”
riding floor scrubbing machines at a cost of
$76,193.46. The District did obtain the required forms for all other equipment purchases and
construction/maintenance projects funded under the grant. Additionally, the NMPED did approve
reimbursement of the $76,193.46.
Questioned Costs: $76,193.46 The NMPED did reimburse these funds, but they could be called into
question for not obtaining the release form prior to purchasing the equipment.
Cause: The District had not captured all costs which required capitalization when the fixed asset
and depreciation detail was provided to the auditors. Additional amounts were identified by the
auditors and by District staff which caused the significant increase in the final value of
capital asset additions for the year which were funded by the grant. The District
expended significant funds for equipment, land improvements, and building improvements during
the year under audit with more than 40 separate construction projects in place and millions of
dollars of additions for single purchase items for equipment and vehicles.
Identifying and capturing all of these costs were significant for the two individuals who are
responsible for these duties when combined with all of their other duties in the District. The
significant increase in the number of projects and the purchases of equipment and vehicles made in
the year made capturing all items timely, correctly categorizing them, and processing depreciation
amounts by the end of the year very difficult. Also, at times, the correct object codes for the
items were not used when the original purchase orders were created. The system is designed
to “hook” those items with pre-identified object codes that should be capitalized.
However, when incorrect object codes are used for capital items that need to be captured and
included in the detail identifying these items must be done manually, and this is a very
time-consuming process.
District personnel had missed communicating internally the purchase of the floor scrubbers and that
this equipment was going to be purchased with grant funds. As such, the department responsible for
obtaining all equipment authorizations was unaware of the
need to initiate the form and obtain NMPED approval.
Effect: The District is not in compliance with Federal regulations related to internal
control procedures and compliance requirements in relation to the grant and could put funding in
jeopardy or require the District to reimburse the program.
Auditor’s Recommendation: We recommend the District emphasize the importance of accurately
identifying all fixed asset additions and construction projects during the year and work to capture
all relevant costs prior to the audit so that they may be coded and tracked to the grant funds
used. These costs should be identified, recorded, and categorized into the proper capital asset
categories in order to maintain accurate records. Original purchase orders should contain the
proper fund and object codes to allow for the system to automatically capture these additions
for review. Finally, when the District engages in as many projects and purchases that
occurred in the year under audit, modifications to work schedules and responsibilities may need to
be contemplated in order to provide sufficient time to capture and complete all the required tasks
in a timely manner.
We recommend that all individuals involved with creating purchase orders in grant funds
be trained in the requirements for purchasing capital assets and the needed
pre-authorizations required. Additionally, we recommend that all individuals involved be trained to
contact the department assigned to obtain the pre-authorization forms from NMPED so that there is
no miscommunication in the future.
Responsible Official’s Plan:
• Specific corrective action plan for finding:
The Finance Grants department along with the Federal Programs department have discovered the need
to add additional approver to include Federal Programs Coordinator and/or Federal Programs
Specialist in requisition process of all purchases involving federal funds. This
adjustment in the approval process will assist in catching all needed documentation
required for the accurate justification and federal compliance. Grants Staff to seek training for purchasing capital assets using grant funds. In addition, verify items that cost over 5k and to make sure there is a 5k equipment form completed/signed and approved
by PED and have it attached to the requisition.
• Timeline for completion of corrective action plan:
June 2023
• Employee position(s) responsible for meeting the timeline:
Grants Specialist and Federal Programs staff.