Finding Text
Finding No. 2023-015 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Matching, Level of Effort, Earmarking Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with the terms and conditions in the Grant Agreement, the State Educational Agencies (SEA) will use (a) not less than twenty percent of its ARP-OA SEA allocation to carry out, directly or through subgrants or contracts, activities to address the academic impact of lost instructional time by supporting the implementation of evidence-based interventions; (b) a portion of their ARP-OA SEA allocation to carry out, directly or through subgrants to Local Educational Agencies (LEAs) or through contracts, the implementation of evidence-based summer enrichment programs; (c) and a portion of their ARP-OA SEA allocation to carry out, directly or through subgrants to LEAs or through contracts, the implementation of evidence-based comprehensive afterschool programs. Condition: PSS did not maintain or provide adequate supporting documentation to demonstrate compliance with the ARP-OA earmarking requirements. Specifically, PSS did not provide budgetary documentation evidencing that the required portions of ARP-OA funds were allocated and expended for allowable evidence-based interventions, summer enrichment programs and comprehensive afterschool programs. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Cause: PSS does not have an effective internal control over financial documentation related to earmarked ARP-OA funds. PSS lacks established procedures to ensure that budget allocations and supporting record related to earmarking requirements are properly prepared, retained and readily available for audit and compliance reporting purposes. Effect or potential effect: PSS is in noncompliance with the earmarking requirements for the ARP-OA program. Questioned costs are undeterminable as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should strengthen internal controls over ARP‑OA earmarking compliance by establishing and implementing formal procedures to ensure that: 1. Required earmarking allocations are clearly identified in budgets; and 2. Supporting documentation is retained, organized, and readily available for audit and compliance review purposes. Views of Auditee and Corrective Action Plan: PSS does not agree with the finding. PSS has allocated and expended more than 20% on evidence-based interventions to address learning loss. Specifically, projects listed under the ARP expense report are mapped directly to learning loss categories (e.g. expenses for summer school, extended learning opportunities, high dosage tutors, etc.). Refer to PSS’ Corrective Action Plan for additional information. Auditor Response: The supporting documentation provided, including the ARPA-OA budget that was resubmitted, did not clearly identify the required earmarking allocations and related expenditures for evidence-based interventions, summer enrichment programs and comprehensive afterschool programs. Recalculation or verification of compliance with the earmarking requirements of the ARP-OA program could not be performed. The finding remains.