Finding Text
8. Criteria or specific requirement (including statutory, regulatory, or other citation) Federal awards claimed on a reimbursement basis must be limited to allowable costs incurred during the period of performance. Recipients must maintain effective internal controls to ensure charges are accurate, supported, and compliant with federal requirements (2 CFR §200.303 – Internal controls; §200.302 – Financial management; §200.403 – Factors affecting allowability of costs; §200.405 – Allocable costs; §200.344 – Closeout). Under cash management principles, reimbursement must not exceed expenditures incurred. 9. Condition The District submitted an expenditure report for $19,165,569 for the quarter ending March 31, 2025, which included amounts that were properly obligated but not yet expended as of the report date. The District reported $14,638,097 in ESSER funds on the Schedule of Expenditures of Federal Awards (SEFA), resulting in an unsupported difference of $4,527,472. 10. Questioned Costs Questioned costs totaled $4,527,472. 11. Context The District claimed the remaining award amount in the March submission as the liquidation extension for the grant was no longer available. 12. Effect The submission of expenditure reports that include unexpended obligations may result in inaccurate financial reporting and misrepresentation of the District’s use of federal funds. This could impact cash management decisions and compliance monitoring by the pass-through entity. 13. Cause As the ESSER grant period approached expiration, management attempted to maximize remaining available funding by submitting reimbursement requests in advance of incurring related expenditures. The District did not have adequate controls in place to ensure that expenditures were incurred prior to requesting federal reimbursement, as required by program regulations. 14. Recommendation We recommend the District submit claims for reimbursement for expenditures that the District has incurred. 15. Management's response See Corrective Action Plan.