Finding 400325 (2023-001)

Finding Number: 2023‐001 Repeat Finding: No Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A220003 $48,491 Supporting Effective Instruction State Grants 84.367 S367A220049 $41,547 Student Support and Academic Enrichment Program 84.424 S424A210003 $29,979 Education Stabilization Fund 84.425C N/A $4,206 Education Stabilization Fund 84.425D S425D200038 $10,867 Education Stabilization Fund 84.425U S425U210038 $9,812,251 Federal Agency: U.S. Department of Education Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance, Material Weakness Compliance Requirements: Activities allowed or unallowed, Allowable costs/cost principles Criteria In accordance with 2 CFR Part 200.303, the District is responsible for the establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the non‐ Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The District did not maintain effective internal control over activities allowed or unallowed and allowable costs/cost principles for several grants. Cause The District’s grant budgets were not approved until well after the beginning of each grant’s period of performance. Additionally, the District did not verify actual spending was within approved budgets, and, therefore, did not submit for budget revisions in a timely manner. Effect Costs were disallowed or entitlement funding was forfeited after the close of the fiscal year. Audit adjustments were necessary to properly state the grant activity on the District’s Schedule of Expenditures of Federal Awards (SEFA). Due to the manner in which the District moved expenditures, the auditors could not determine if costs moved between grants complied with relevant Federal statutes, regulations, and the terms and conditions of the Federal award.Context The District was not timely managing and revising grant agreements with the Arizona Department of Education throughout the fiscal year. As a result, material adjustment to the grant activity of four entitlement grants was posted during the completion report process in February 2024. The District moved unallowed costs in total from each grant to the American Rescue Plan ‐ Elementary and Secondary School Emergency Relief (ARP ESSER) grant without identifying specific transactions or positions to ensure allowability under the ARP ESSER grant. Activity moved en‐masse to the ARP ESSER grant was as follows:  $1,299,850 from Title I Grants to Local Educational Agencies (ALN 84.010)  $120,986 from Supporting Effective Instruction State Grants (ALN 84.367)  $41,547 from Student Support and Academic Enrichment Program (ALN 84.424)  $8,345,868 from Elementary and Secondary School Emergency Relief (ESSER) Fund (ALN 84.425D) Additionally, the District did not have controls in place to ensure costs were not charged to inactive grant funds. As a result, the following grants had transactions recorded to them that were not associated with an active grant agreement:  Title I Grants to Local Educational Agencies (ALN 84.010) ‐ $48,491  Supporting Effective Instruction State Grants (ALN 84.367) ‐ $45,152  Student Support and Academic Enrichment Program (ALN 84.424) ‐ $29,979  Elementary and Secondary School Emergency Relief (ESSER) Fund (ALN 84.425D) ‐ $10,867  Governor’s Emergency Education Relief (GEER) Fund (ALN 84.425C) ‐ $4,206 The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should provide training for those with grants management responsibilities. In particular, the District should provide training on the relationship between the District’s accounting records and the State’s grants management enterprise to ensure grant budgets are not overexpended going forward. The District should also have more consistent and timely oversight of grants by higher level management. Views of Responsible Officials See Corrective Action Plan.