Finding 39649 (2022-001)

Material Weakness
Requirement
B
Questioned Costs
$1
Year
2022
Accepted
2023-03-28
Audit: 37215
Organization: Little Rock School District (AR)

AI Summary

  • Core Issue: The District purchased 447 pieces of equipment over $5,000 without prior written approval, violating federal requirements.
  • Impacted Requirements: OMB 2 CFR section 200.439 mandates prior approval for capital expenditures from federal funds.
  • Recommended Follow-Up: The District should seek guidance from the Arkansas Division of Elementary and Secondary Education and strengthen internal controls for future expenditures.

Finding Text

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425U PASS-THROUGH NUMBER 6001 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 Criteria or specific requirement: Purchases of equipment and other capital expenditures require the written approval of the Federal awarding agency or pass-through entity, as specified in Office of Management and Budget (OMB) 2 CFR section 200.439. Condition: In our test of equipment purchases from the COVID-19 Education Stabilization Fund, we identified the purchase of 447 pieces of equipment with unit costs greater than the $5,000 threshold for which the District did not obtain prior written approval from the Arkansas Division of Elementary and Secondary Education. Retroactive approval was subsequently obtained from DESE during audit fieldwork. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $2,859,534 were paid from the COVID-19 Education Stabilization Fund. Questioned costs: The amount of questioned costs was $2,859,534. Context: We examined all capital expenditures of the COVID-19 Education Stabilization Fund totaling $4,660,482. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District will continue to monitor internal controls in regards to use of ESSER funds and ensure all prior approvals are granted by DESE before purchasing of capital assets with a unit value equal to or greater than $5,000.

Corrective Action Plan

Finding 2022-001 Allowable Costs/Cost Principles Criteria or Specific requirement: Purchases of equipment and other capital expenditures require the written approval of the Federal awarding agency or pass-through entity, as specified in Office of Management and Budget (OMB) 2 CFR section 200.439. Condition: In our test of equipment purchases from the COVID-19 Education Stabilization Fund, we identified the purchase of 447 pieces of equipment with the unit costs greater than the $5,000 threshold for which the District did not obtain prior written approval from the Arkansas Division of Elementary and Secondary Education (DESE). Retroactive approval was subsequently obtained from DESE during the audit fieldwork. LRSD Response: The District will continue to monitor internal controls in regards to use of ESSER funds and ensure all prior approvals are granted by DESE before purchasing of capital assets with a unit value equal to or greater than $5,000. Responsible LRSD Staff: Kelsey Bailey, CDFO, will be responsible for ensuring compliance. Completion Date: Kelsey Bailey has made contact with Jayne Greene at DESE for guidance and retroactive approval was granted from DESE on March 9, 2023. Please let me know if additional information is needed. Respectfully, Kelsey Bailey Chief Deputy Finance & Operations Officer

Categories

Questioned Costs Allowable Costs / Cost Principles Internal Control / Segregation of Duties Procurement, Suspension & Debarment Subrecipient Monitoring

Other Findings in this Audit

  • 39650 2022-001
    Material Weakness
  • 39651 2022-001
    Material Weakness
  • 39652 2022-001
    Material Weakness
  • 616091 2022-001
    Material Weakness
  • 616092 2022-001
    Material Weakness
  • 616093 2022-001
    Material Weakness
  • 616094 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.010 Title I Grants to Local Educational Agencies $12.68M
10.553 School Breakfast Program $3.18M
84.367 Supporting Effective Instruction State Grants $1.17M
84.371 Comprehensive Literacy Development $1.17M
84.287 Twenty-First Century Community Learning Centers $1.14M
32.009 Emergency Connectivity Fund Program - Covid-19 $1.04M
10.555 National School Lunch Program $941,954
84.027 Special Education_grants to States $647,478
84.424 Student Support and Academic Enrichment Program $404,646
84.048 Career and Technical Education -- Basic Grants to States $326,211
15.904 Historic Preservation Fund Grants-in-Aid $218,889
84.002 Adult Education - Basic Grants to States $184,453
84.365 English Language Acquisition State Grants $165,866
10.579 Child Nutrition Discretionary Grants Limited Availability $147,447
10.582 Fresh Fruit and Vegetable Program $108,835
84.173 Special Education_preschool Grants $98,021
12.U01 Rotc $87,193
93.558 Temporary Assistance for Needy Families $77,776
84.196 Education for Homeless Children and Youth $40,716
84.425 Covid-19 - Education Stabilization Fund $15,217
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance $9,776