Finding 43413 (2022-001)

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE AND REPORTABLE NONCOMPLIANCE ? U.S. DEPARTMENT OF EDUCATION ? PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, COVID-19 ? EDUCATION STABILIZATION FUND, FEDERAL ALN 84.425 2022-001 Internal Control Over Compliance With Equipment and Real Property Management and Reportable Noncompliance Criteria ? 2 CFR ? 200.313 (c)(1) and (d)(1) requires that Higher Ground Academy (the Academy) obtain approval from the federal funding agency or pass-through agency prior to the purchase of equipment with federal funding. The Academy must also maintain property records adequate to identify and track equipment purchased with federal funding, including the federal award under which the equipment was purchased. Condition ? During our audit, we noted the Academy did not have sufficient controls in place within the Education Stabilization Fund federal program to assure compliance with federal equipment and real property management requirements, resulting in reportable noncompliance. Questioned Costs ? None. Context ? The Academy did not obtain approval from the federal funding awarding agency or pass-through agency prior to purchasing equipment with a total value of $56,205 using federal funds. The Academy?s property records also did not contain all information required by the Uniform Guidance to adequately identify and track this equipment. Repeat Finding ? This is a current year finding. Cause ? This condition was due to a misunderstanding of the individual item value, at which federally funded equipment purchases were required to be preapproved and tracked. Effect ? Noncompliance with the equipment and real property management could be viewed as a violation of the award agreement and result in loss of funds. Recommendation ? We recommend that the Academy review its internal control procedures to ensure future compliance with the federal compliance requirements specific to equipment and real property management for the Education Stabilization Fund federal program. View of Responsible Official and Planned Corrective Actions ? The Academy agrees with the finding. The Academy intends to revise its internal capitalization threshold to align with the federal threshold, and to review its other control procedures relating to equipment and real property management requirements to ensure compliance for future federal awards expenditures. The Academy has separately issued a Corrective Action Plan related to this finding.