Finding Text
50000 – Equipment and Real Property Management (Material Weakness in Internal Control over Compliance, Material Noncompliance)
Federal Agency: U.S. Department of Education
Pass-Through Entity: California Department of Education (CDE)
Program Name: Education Stabilization Fund
Federal Financial Assistance Listing: 84.425D, 84.425U, 84.425W
Compliance Requirement: F. Equipment and Real Property Management
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria or Specific Requirements
Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.313 requires the District to maintain inventory of equipment purchased with federal awards. In addition, Title 2, Code of Federal Regulations, Part 200, Subpart E, Section 200.439 requires the District to obtain written approval from the California Department of Education (CDE) prior to purchasing equipment for which the per unit costs exceeds $5,000.
Condition
The District does not maintain a capital asset inventory. In addition, the District expended $833,253 of ESSER III and ESSER III State Reserve Learning Loss funds on capital expenditures that were not preapproved by the pass-through agency, as required. One in four transactions tested, the District did not have a preapproval from CDE.
Cause
The condition identified appears to have materialized due to the District's lack of awareness of requirements under Title 2, Code of Federal Regulations, Part 200, Subpart E, Sections 200.313 and 200.439.
Effect
The District currently assumes all the risk of non-compliance with requirements stated underTitle 2, Code of Federal Regulations, Part 200, Subpart E, Sections 200.313 and 200.439 due to the lack of maintaining a capital asset inventory and lack of preapproval from the pass-through agency, as required.
Questioned Costs
As a result of the condition identified above, a total of $833,253 in questioned costs were identified.
Context/Sampling:
The condition was identified as a result of inquiry with the District’s personnel and review of ESSER III and ESSER III State Reserve Learning Loss expenditures and related invoices. Nonstatistical sample of four of six transactions were selected for testing. The District did not have a preapproval from CDE for one of the four transactions tested.
Repeat Finding
Yes, see prior year finding 2023-004.
Recommendation
The District should review the requirements stated in Title 2, Code of Federal Regulations, Part200, Subpart E, Sections 200.313 and 200.439 and implement procedures to address the deficiencies currently identified.