Finding 520622 (2024-001)

Federal Program Affected Program Name: Education Stabilization Funds Assistance Listing Number: 84.425 Pass-Through Entity Number: 15547 Pass-Through Entity: California Department of Education (CDE) Federal Agency: U.S. Department of Treasury Compliance Requirement: Reporting Type of Finding: Material Weakness in Controls over Compliance Criteria or Specific Requirements Local education agencies must comply with all reporting requirements that the Department of Education may reasonably require. Section 15011 of Division B of the Coronavirus Aid, Relief, and Economic Security (CARES) Act requires that a grantee submit annual reports. In addition, the Uniform Guidance, Section 200.303 Internal Controls, requires that the non-Federal entity must establish and maintain documentation of effective internal controls over Federal awards that provide reasonable assurance that awards are being managed in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition During our testing over reporting of the Education Stabilization Fund awards, we noted that the entity did complete the required annual reports on time. However, the entity did not use the most up to date general ledger reports that supported the prior year ending Schedule of Expenditures of Federal Awards (SEFA) amounts, which should have been the proper amounts reported on the annual expenditure reports. ESSER II, Resource 3212, reported expenditures of $586,935, while the SEFA reported $622,765.Cause The condition identified appears to have materialized due to the Business Services personnel not following their internal control policies and procedures of using the most up to date general ledger reports when preparing their annual expenditure reports. Effect The entity did not comply with the reporting requirements as specified by the California Department of Education, as well as the internal control requirements for Federal awards. Questioned Costs Since the correct expenditures were reported on the SEFA, and the annual expenditure reports were only off due to incorrect dates being used to run the general ledger reports, the likely questioned cost will be $0. Context The entity did not comply with the reporting requirements as specified by the California Department of Education because of the incorrect date used to run reports. Repeat Finding No. Recommendation The entity should review their policies and procedures related to required reporting requirements of federal awards and ensure that general ledger reports being used are the most accurate and up to date reports. Corrective Action Plan and Views of Responsible Officials Santa Cruz COE will ensure current ledger reports are generated from the financial system at the time reports are submitted.