Finding 519634 (2024-003)

Material Weakness
Requirement
AB
Questioned Costs
$1
Year
2024
Accepted
2025-01-17
Audit: 338734
Organization: Upland Unified School District (CA)
Auditor: Eide Bailly LLP

AI Summary

  • Core Issue: The District misused $1,500,000 in program funds for unallowed post-retirement health plan contributions.
  • Impacted Requirements: This violates Title 2, Code of Federal Regulations, Part 200.431(h)(1) regarding allowable costs.
  • Recommended Follow-Up: The District needs to establish controls to ensure all federal program expenditures are compliant with regulations.

Finding Text

2024-003 50000 – COVID-19 - Education Stabilization Fund – Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Material Weakness in Internal Control Over Compliance, Material Noncompliance) Federal Agency: U.S. Department of Education Pass-Through Entity: California Department of Education Program Name: COVID-19 - Education Stabilization Fund Federal Financial Assistance Listing: 84.425U Compliance Requirements: A/B - Allowed or Unallowed & Allowable Costs/Cost Principles Type of Finding: Material Weakness and Material Noncompliance Criteria or Specific Requirements Title 2, Code of Federal Regulations, Part 200.431(h)(1) states that for post-retirement health plans financed on a pay-as-you-go method, allowable costs are limited to those representing actual payments to retirees or their beneficiaries. Condition The District used program funds to make a contribution of $1,500,000 to a trust held for postemployment benefits which is financed using the pay-as-you-go method. Additionally, the District charged indirect costs of $48,789 in direct relation to the unallowable direct costs charged. Cause The District appears to have been unaware of this requirement. Effect The District is not in compliance with the provisions of Title 2, Code of Federal Regulations, Part 200.431(h)(1). Questioned Costs The condition identified above resulted in known questioned costs of $1,548,789. Context/Sampling The condition was identified through review of post-retirement health plan trust contributions. We reviewed 100% of such contributions. Repeat Finding No. Recommendation The District should implement controls to ensure that all expenditures charged to federal programs are allowable.

Categories

Questioned Costs Allowable Costs / Cost Principles

Other Findings in this Audit

  • 519633 2024-003
    Material Weakness
  • 519635 2024-003
    Material Weakness
  • 519636 2024-005
    Material Weakness
  • 519637 2024-005
    Material Weakness
  • 519638 2024-004
    Material Weakness
  • 519639 2024-004
    Material Weakness
  • 519640 2024-004
    Material Weakness
  • 1096075 2024-003
    Material Weakness
  • 1096076 2024-003
    Material Weakness
  • 1096077 2024-003
    Material Weakness
  • 1096078 2024-005
    Material Weakness
  • 1096079 2024-005
    Material Weakness
  • 1096080 2024-004
    Material Weakness
  • 1096081 2024-004
    Material Weakness
  • 1096082 2024-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.027 Special Education Grants to States $2.35M
10.553 School Breakfast Program $835,603
10.555 National School Lunch Program $315,013
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $232,768
84.424 Student Support and Academic Enrichment Program $190,081
84.010 Title I Grants to Local Educational Agencies $116,697
84.048 Career and Technical Education -- Basic Grants to States $86,340
10.558 Child and Adult Care Food Program $48,390
84.425 Education Stabilization Fund $42,553
84.365 English Language Acquisition State Grants $17,937
84.002 Adult Education - Basic Grants to States $8,340