FINDING REFERENCE NUMBER 2025-001 FEDERAL PROGRAMS (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A230003 (07/01/2023 – 09/30/2024); H027A240003 (07/01/2024 – 09/30/2025); H173A230002 (07/01/2023 – 09/30/2024); H173A240002 (07/01/2024 – 09/30/2025) COMPLIANCE REQUIREMENTS ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR Section 200.302 (a) establishes that each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state’s own funds. In addition, the state and the other non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403 (b) establishes that except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards. In addition, IDEA’s Special Education—Grants to States program (IDEA, Part B) provides grants to states, and through them to LEAs, to assist them in providing special education and related services to eligible children with disabilities ages 3 through 21 (20 USC 1411). STATEMENT OF CONDITION As part of our procedures over internal controls and compliance for the allowable activities’ requirement, we selected a sample of eighty-five (85) disbursement to suppliers made during fiscal year under audit. We noted the following deficiencies: 1. In three (3) disbursement vouchers, the Excel master sheet and the adjustment report presented different amounts. No justification was provided for the differences in the reports. 2. In one (1) disbursement we found that the therapy, monthly, and tuition costs per student did not match the contract, which already stipulated a cost for each service per student. We were not presented with any evidence that the contract had been amended; we were only provided with a letter from PRDE approving the cost increase across the board. 3. In forty-three (43) vouchers evaluated, it was found that the invoiced expenses corresponded to both cluster programs (ALNs 84.027 and 84.173), and the invoices established this. However, the expenses in the system were recognized in grant ALN 84.027, not according to the participants attending and invoiced, according to their age. 4. In five (5) disbursement vouchers related to educational services and therapies, we found in the master Excel spreadsheet of three (3) different entities, participants ranging in age from 22 to 31 years old were provided educational services. In total, seven (7) students over 21 years of age were identified among the three entities. The amount related to these students is $85,535. 5. In two (2) disbursement vouchers related to educational services in private institutions, three (3) participants were invoiced and paid, who, in accordance with the excel master of each institution, attend to another private institution. 6. In eight (8) disbursement vouchers related to therapies provided by private educational institutions, the costs for therapies are higher than the costs according to the contract fee schedule. 7. In eight (8) disbursement vouchers, no details were provided on how the monthly educational costs were determined. The proposals submitted are inconsistent with the invoices and do not describe the services included in each monthly payment. 8. Of the selected sample, there was one (1) disbursement voucher for which we were not provided with evidence of the master Excel spreadsheet, a document that details each participant, the service provided, the cost of the service, among other information necessary to evaluate the disbursement. The amount paid for this invoice was $568,968. 9. On a disbursement voucher, we noticed that the invoice included 38.5 hours of service. However, the invoice details only showed 36 hours of service rendered, with payment made for 2.5 hours for which no details of the services rendered were provided. The total overpayment to the supplier is $312.50. QUESTIONED COSTS We understand that the $312.50 described in the condition number 9 is not allowable. In addition, because the PRDE was not able to provide the Excel Master spreadsheet for a disbursement voucher, we were unable to audit this transaction. The amount of this voucher is $568,968. In relation to participants who are more than 21 years old, the amount included in the vouchers evaluated is $85,535; for a total estimated amount of $654,815.50. PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training and controls that require standard evaluation, approval, and reporting of expenditures incurred. In addition, standardized documentation in the educational services should be maintained which presents clear costs for services provided and reasons for modification of the legal contract, modifying amounts and services, should be available for inspection. The sample was statistically valid sample. STATEMENT OF CAUSE According to interviews carried out and documentation evaluated, some goods and services are received in the different Regional Offices (ORE), and each one carries out similar, but not standard, processes when certifying as received or pre-intervening invoices. No evidence regarding how the PRDE monitors the age of the participants when they reach 21 years of age and properly documents the reasons to continue providing the services after reaching 21 years of age. Regarding the distribution of expenses, according to interviews and evaluated documentation, it was found that at the time of binding a contract, an analysis of the assigned participants is not made, in order to be able to make a distribution between the two programs of the cluster according to the age of the participant. In addition, according to interviews, although the contract budget is validated, they only limit themselves to verifying the amount available in general and there is no distribution of the expense according to the service provider's invoice. There is no clear process in place for negotiations with private institutions, nor is there a clear way to determine whether the cost of educational services is reasonable. POSSIBLE ASSERTED EFFECT The PRDE is reporting expenses within the cluster that do not necessarily reflect the actual expenses incurred by each program in the cluster, this deficiency requires that when the period of availability of funds is ending, some adjustments be made to reclassify expenses, up to the amount of the award. In addition, the PRDE may have incurred payments for which the service or good were not provided as contracted. The PRDE was not able to present how they are monitoring that the services provided to the participants are reasonable and comply with the necessities of the child. Furthermore, no proper documentation is maintained when services are provided to participants who reach 21 years and are required to provide any service. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2024-002). RECOMMENDATIONS We recommend that the PRDE establish standardized written guidelines and train the staff of the Regions to carry out and document the reviews and approvals of services and ascertain that this information is uploaded in the accounting system of SIFDE. In addition, the personnel must be instructed to account for the budget and expense of therapy and related services, according to the enrollment of students who will attend, in accordance with the program that applies within the cluster.