CORRECTIVE ACTION PLAN
December 18, 2023
The Kutztown Area School District respectfully submits the following corrective action plan for the fiscal year ended June 30, 2023.
Name and address of Independent Public Auditing Firm:
Herbein & Company
2763 Century Blvd.
Reading, PA 19610
Audit Period:
July 1, 2022 - June 30, 2023
The findings from the June 30, 2023 schedule of findings are discussed below.
Section III - Federal Awards Findings and Questioned Costs
2023-001 EQUIPMENT AND REAL PROPERTY MANAGEMENT - SIGNIFICANT DEFICIENCY
Federal Program
Education Stabilization Fund
ALN 84.425D - COVID-19 - Elementary Secondary School Emergency Relief Fund (ESSER II), contract #200-210215
ALN 84.425U - COVID-19 - Elementary Secondary School Emergency Relief Fund (ESSER III), contract #223-210215
Criteria
In accordance with Uniform Guidance Title 2 CFR 200.313, a non-Federal entity may not encumber equipment without prior approval of the Federal awarding agency.
Condition
The District charged costs for server and firewall purchases which met the definitions and thresholds requiring prior written approval, however, the District’s grant applications did not include these purchases as part of the budget submitted and they did not obtain prior approval through other means.
Cause
The District revised their original plan for spending of the ESSER funds and there was oversight in completing a revised budget to reflect the changes which included purchases that required pre-approval. Information regarding the pre-approval requirement for equipment purchases was not properly communicated between federal program leadership and the business office. Controls in place over equipment and real property management did not detect the pre-approval requirement prior to encumbering the cost using federal funds.
Effect
Costs encumbered without required prior approval are unallowable. The District subsequently communicated with the Pennsylvania Department of Education (PDE), the passthrough agency, and submitted budget revisions including these costs which were approved by PDE and deemed allowable.
Questioned Costs
None.
Context
We examined all equipment purchases charged to the Education Stabilization Fund during the year. Two of the three invoices examined had purchases totaling $110,986 which required pre-approval. Pre-approval was not obtained for either purchase; however, they were subsequently approved via interim budget revisions.
Repeat Finding
No.
Recommendation
We recommend the District revisit procedures for reviewing program guidelines and requirements prior to approving and incurring costs for equipment and real property from federal funding sources.
Action Plan
The District had made revisions to the original ESSER budgets to utilize ESSER funds to include upgrades technology infrastructure. The magnitude of these expenditures created an unrecognized need for preapproval of capitalized equipment from the Federal award agency. While all other purchasing requirements were properly documented, the District recognized the need for the additional level of approval subsequent to the purchase of the equipment.
The necessary ESSER prior approval for the capital expenditures was applied for and awarded by the Federal awarding agency. Additionally, internal processes have been added to purchasing with grant funds. Any future changes to grant budgets will be requested prior to purchasing.
Anticipated Completion Date
Action plan fully implemented as of report date.
If the Department of Education has questions regarding this plan, please contact Elizabeth A. Siteman
at 610-683-7361, extension 5526 or via email at esiteman@kasd.org.
Sincerely,
Elizabeth A. Siteman
Business Administrator