Finding 50845 (2022-001)

Significant Deficiency
Requirement
B
Questioned Costs
$1
Year
2022
Accepted
2023-03-29
Audit: 50945
Organization: Huntsville School District (AR)

AI Summary

  • Core Issue: The District made seven equipment purchases over $5,000 without required prior written approval, totaling $148,687.
  • Impacted Requirements: Purchases must comply with OMB 2 CFR section 200.439, which mandates prior approval for capital expenditures.
  • Recommended Follow-Up: The District should seek guidance from the Arkansas Division of Elementary and Secondary Education and strengthen internal controls over expenditures.

Finding Text

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBERS 84.425D AND 84.425U PASS-THROUGH NUMBER 4401 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 2022-001. Allowable Costs/Cost Principles Criteria or specific requirement: Purchases of equipment and other capital expenditures require the prior 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 expenditures from the COVID-19 Education Stabilization Fund, we identified seven equipment purchases 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. These purchases had a total cost of $148,687. Cause: Lack of internal controls and management oversight over program expenditures. Effect or potential effect: Unallowable costs of $148,687 were paid from the COVID-19 - Education Stabilization Fund. Questioned costs: The amount of questioned costs was $148,687. Context: We examined all capital expenditures of the COVID-19 - Education Stabilization Fund totaling $973,158. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: Initial guidance for utilizing ARP/ESSER purchasing practices from the state department was that only Facilities and Transportation purchases required prior approval. It was our understanding that the items which are listed in the finding would not fall in that category even though they exceeded $5,000 pre-approval guidance. The state department issued a memo (COM-22-047) that clarified this issue and we are working to ensure that our purchasing practices changed after this memo was issued.

Corrective Action Plan

Finding number 2022-001 Contact person responsible for corrective action: Jonathan Warren Corrective Action: Initial guidance for utilizing ARP/ESSER purchasing practices from the state department was that only Facilities and Transportation purchases required prior approval. It was our understanding that the items listed in the finding would not fall in that category even though they exceeded the $5,000 pre-approval guidance. The state department issued a memo (COM-22-047) that clarified this issue. Since the clarification memo was issued we have worked to ensure that our purchasing practices have changed to follow the appropriate guidelines. Corrective Action Date: March 6, 2023. Respectfully, Jonathan Warren Superintendent Huntsville School District

Categories

Questioned Costs Allowable Costs / Cost Principles Internal Control / Segregation of Duties

Other Findings in this Audit

  • 50846 2022-001
    Significant Deficiency
  • 627287 2022-001
    Significant Deficiency
  • 627288 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.425 Covid-19 - Education Stabilization Fund $2.10M
84.010 Title I Grants to Local Educational Agencies $795,436
84.027 Special Education_grants to States $477,100
10.553 School Breakfast Program $255,340
10.555 National School Lunch Program $88,725
84.367 Supporting Effective Instruction State Grants $78,122
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $56,869
84.011 Migrant Education_state Grant Program $46,558
84.358 Rural Education $35,341
84.424 Student Support and Academic Enrichment Program $20,281
84.173 Special Education_preschool Grants $12,423
84.365 English Language Acquisition State Grants $3,367