Finding 512475 (2024-005)

Finding 2024-005 – ACTIVITIES ALLOWED OR UNALLOWED and ALLOWABLE COSTS/COST PRINCIPLES (repeat comment) Type: Material weakness in internal control over compliance / Noncompliance Program: COVID 19 Education Stabilization Fund (ALN 84.425U – ESSER III Formula) Condition: Expenditures charged to the grant were not authorized in the grant budget. Criteria: As detailed by 2 CFR 200.402, “the total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits”. Cause: Management’s misunderstanding of costs allowed under this grant. Effect: Unallowed costs were charged to the grant based on comparison to MDE approved budgets. Consequently, reimbursements (funding sources) may be overstated. Context: Amounts expended in the current year for this grant by function code and/or object code were over the amounts allowed in the MDE approved budget by $377,467. Also, supplies and equipment charged to the grant were not approved in the grant. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of allowable costs and then establish internal controls to assure that 1) charges to the grant do not exceed budget, and 2) only allowable costs are charged to the grant. Management’s Resp: Management is in agreement with this recommendation.