Finding Text
50000 - Reporting (Material Weakness in Internal Control over Compliance, Material Noncompliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education (CDE) Program Name: Education Stabilization Fund Federal Financial Assistance Listing: 84.425U, 84.425W Award Identification Numbers: 15559, 15566 Award Year: 2021 Compliance Requirement: L. Reporting Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria Local education agencies must comply with all reporting requirements that Section 15011 of Division B of the Coronavirus Aid, Relief, and Economic Security (CARES) Act requires that a grantee submit quarterly and annual reports. ESSER Funds awarded under the American Rescue Plan (ARP) Act of 2021 are subject to the same quarterly and annual reporting requirements. Additionally, per Title 2, Code of Federal Regulations, Part 200, Subpart D, Section 200.333, financial records and supporting documents pertinent to a Federal award must be retained for a period of three years from the date of submission of expenditure reports to the awarding agency or passthrough entity. Condition The District included encumbered expenditures in two of three quarterly reports tested. The encumbered expenditures were included in the quarterly reporting to the California Department of Education for the COVID-19 Elementary and Secondary School Emergency Relief III (ESSER III) Fund and Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve, Learning Loss programs, instead of only actual expenditures. In addition, the District was unable to provide financial records or supporting documents for annual report tested that agreed to the expenditures reported to the California Department of Education, or that agreed to the full-time equivalent positions required by the ESSER annual report. Cause The identified condition appears to have materialized due to misunderstanding of the reporting requirements and insufficient procedures related to the retention of financial records. Effect The District has not complied with the requirements identified in Section 15011 of Division B of the Coronavirus Aid, Relief, and Economic Security (CARES) Act or Title 2, Code of Federal Regulations, Part 200, Subpart D, Section 200.333. Questioned Costs None reported. Context/Sampling A nonstatistical sample of three of seven quarterly reports, and one of one annual reports, were tested. Repeat Finding Yes, see prior year finding 2024-005. Recommendation The District should ensure that all federal expenditure reports are supported by financial reports. These records should be maintained for a period of three years from the date of submission of the expenditure reports to the awarding agency or pass-through entity.