2023-001 The District did not have adequate internal controls for ensuring compliance with allowable activities and costs and restricted purpose requirements.
Assistance Listing Number and Title: 32.009, COVID-19 – Emergency Connectivity Fund Program
Federal Agency Name: Federal Communications Commission
Federal Award/Contract Number: ECF222117594, ECF202111877
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
Known Questioned Cost Amount: $3,513,600
Prior Year Audit Finding: Yes, Finding 2022-001
Background
The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as “unmet need.” In fiscal year 2023, the District spent $3,550,458 in ECF Program funds to purchase laptops and Wi-Fi hotspots for students.
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 established controls.
Allowable activities and costs
ECF Program recipients may only seek reimbursement for eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking reimbursement for eligible equipment and services used solely at the school or held for future use (in other words, warehousing).
Restricted purpose – unmet need
When submitting applications to the Federal Communications Commission (FCC), schools only had to provide an estimate of their students’ and staff’s unmet need. However, when requesting reimbursement, the District could only request program funds for eligible equipment and services provided to students and school staff with actual unmet need.
Description of Condition
Allowable activities and costs/restricted purpose – unmet need
The District estimated unmet need for eligible equipment when it applied for ECF Program funds. However, our audit found the District’s internal controls were ineffective for ensuring it documented the determination of actual unmet need and only requested reimbursement for equipment provided to students. Specifically, the District purchased laptops, based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $3,513,600. However, the District did not maintain documentation showing it provided each laptop paid with program funds to a student or employee with unmet need.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
Allowable activities and costs/restricted purpose – unmet need
As communicated in the prior audit finding, the District staff said they thought the determination of unmet need provided during the application process was sufficient to comply with this requirement. Since the funding spanned two fiscal years, the District had already distributed laptops and requested reimbursement before the prior audit identified this issue. The District did not take any additional action and is waiting for audit resolution from the federal grantor.
Effect of Condition and Questioned Costs
Allowable activities and costs/restricted purpose – unmet need
Because the District did not have documentation supporting whether it provided eligible equipment to students with actual unmet need, it cannot demonstrate compliance with the program’s requirements. Given the nature of the program and circumstances, it is likely that at least some of the equipment the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students’ actual unmet need means that most costs are unsupported. Since we do not have a reasonable basis for estimating how much of the District’s expenditures are allowable, we are questioning all unsupported costs.
Federal regulations require the Office of the Washington State Auditor to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures.
Recommendation
We recommend the District work with the awarding agency to determine audit resolution.
We further recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should request reimbursement only for eligible equipment and services provided to students with unmet need, and maintain documentation demonstrating compliance.
District’s Response
The district does not concur with the audit finding or the $3.5 million of questioned costs. A component of the Emergency Connectivity Fund (ECF) program is to seek support for eligible equipment provided to students and school staff who would otherwise lack access to connected devices sufficient to engage in remote learning. When it comes to making this determination of unmet need, the Federal Communications Commission (FCC) explains that any survey information provided with the application will be sufficient enough to determine unmet need at the time of reimbursement.
Being forced into an unprecedented educational landscape amid a pandemic necessitated an expansive adoption of remote learning with a variety of challenges. Indeed, our district had the first confirmed student case of COVID-19 in the United States. These complexities unearthed many reasons why district-issued devices are the only devices truly sufficient to face the new educational challenges of attempting to provide a free, appropriate public education during a global health crisis. These reasons include: consistent access to curriculum and supplemental resources through district licenses; providing access to accessibility tools not available to deploy on personal devices; web filtering of malicious content threatening student accounts off-campus and to meet e-Rate filtering requirements; content monitoring for timely intervention and support of students’ social and emotional health which was significantly impacted by the pandemic; the ability to automatically authenticate student accounts for Zoom; the ability to conduct state required testing not allowed on personal devices; and the ability for technology staff to provide direct technical support through remote access. While the District was attempting to ensure all students had adequate support for learning activities amid a global health crisis, the district determined that students needed district devices and therefore had sufficient unmet need to justify providing 8,000 devices. The district firmly stands by those determinations.
In its review of the district’s claim made in May 2023, the Washington State Auditor’s Office (SAO) finds that the district did not retain specific enough documentation at the time of reimbursement to meet their interpretations of the FCC requirements regarding unmet need. However, the district assessed unmet need based on the fact that our devices were no longer sufficient for students to engage in remote learning per the FCC FAQ 6.16 and the initial assessment would not change at the time of request of reimbursement. The district retained the assessment documentation of our rationale as to how the devices met the standards of the FCC and provided the SAO with this information. As such, the district maintains that it met all the requirements. Therefore, we disagree with the Auditor’s position regarding the narrowness of acceptable actions and processes relating to unmet need determinations.
The funding and assistance to meet student needs during the pandemic was essential and necessary in all respects. The district did not take lightly our obligation to follow the established rules and guidance available to us. Based on the information outlined above, we feel strongly that we have fully accomplished that obligation. We have accounted for all our devices and have fulfilled the responsibility of determining the unmet needs of our students. We therefore do not believe that any of the $3.5 million in costs is in question.
Auditor’s Remarks
We value our partnership with the District in striving for transparency in public service. When auditing federal programs of any kind, governments must provide documentation to substantiate that they met the award requirements. As is our practice and audit standards require, we will review the status of this finding during our next audit. SAO continues to advocate for clear, timely guidance from federal agencies.
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 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.