Finding Text
SCHEDULE OF FEDERAL AWARD FINDINGS AND
QUESTIONED COSTS
Wahkiakum School District No. 200
September 1, 2022 through August 31, 2023
2023-001 The District did not have adequate controls for ensuring compliance with federal requirements for allowable costs and cost principles.
Assistance Listing Number and Title: 84.425 – COVID-19 – Education Stabilization Fund
Federal Grantor Name: U.S. Department of Education
Federal Award/Contract Number: N/A
Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI)
Pass-through Award/Contract Number: COVID-19, 84.425D – 0120409 COVID-19, 84.425U – 0138297
COVID-19, 84.425U – 0137278
COVID-19, 84.425W – 0459624
COVID-19, 84.425D
Known Questioned Cost Amount: $48,342
Prior Year Audit Finding: N/A
Description of Condition
The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2023, the District spent $739,218 of its ESF awards. This included $452,368 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $285,947 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $903 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W).
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of program controls.
The District's internal controls were inadequate in ensuring it charged only allowable costs to the program. The District prepaid for services based on a quote from its vendor. The District was subsequently notified by the vendor that the services could not be provided for that initially quoted price. As a result, the District did not receive these services yet charged these costs to the federal program.
We consider this internal control deficiency to be a significant deficiency.
Cause of Condition
The District initially believed the vendor would honor the quote but did not reconsider the expense’s grant allowability after it found out the vendor would not be providing these services for the amount paid.
Effect of Condition and Questioned Costs
The District charged $48,342 of costs to the program for which it received no services. As this is not an allowable use of program funds, we are questioning these costs.
Recommendation
We recommend the District establish and follow internal controls to ensure all costs charged to federal programs are allowable and comply with cost principles.
District’s Response
Wahkiakum School District concurs with the Audit description of condition in that a Vendor entered a contract to provide a service and then backed out of the signed contract after it was to be implemented. Due to the late notification of the Vendor's intent to rescind their service and not provide the services that had been agreed to under the contract, the District failed to get a timely refund prior to the ESSER II funding window closing.
Auditor’s Remarks
We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District’s corrective action during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.