Finding Text
2023-003 Improve Controls and Documentation Over Allowability of Costs Federal Agency: U.S. Department of Education Award Name: COVID-19 – Education Stabilization Fund (“ESSER Grant”) AL Number(s): 84.425 Award Year: 2022 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Award Name: Special Education Cluster AL Number(s): 84.027, 84.173 Award Year: 2022 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management of the City is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context A sample of invoices were tested in order to determine if costs were allowable and adequately approved. As a result of our testing, it was determined that invoices were not approved for one transaction in the Education Stabilization Fund program and one invoice could not be provided, including evidence of approval, in the Special Education Cluster. Cause Weaknesses in the design and implementation of internal controls. Effect or Potential Effect Due to the weaknesses in internal controls noted above, there is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Questioned Costs None reported. Identification as a Repeat Finding This is a repeat of finding 2022-003. Recommendation The City should address the weaknesses in internal controls noted above in order to provide reasonable assurance that federal award transactions are allowable and in accordance with the applicable cost principles. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.