Finding Text
1. Schedule of Expenditures of Federal Awards
Finding Number: 2023-006
Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund
Federal Award Identification Number / Year: 2023
Federal Agency: U.S. Department of Education
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Pass-Through Entity: Ohio Department of Education and Workforce
Repeat Finding from Prior Audit? No
Noncompliance and Material Weakness
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 CFR 200.403(b) which requires, in part, except where otherwise authorized by statute, costs must conform to any limitations or exclusions set forth in 2 CFR Part 200 Subpart E or in the Federal award as to types or amount of cost items in order to be allowable under Federal awards.
Further, Section 18003(d) of the Coronavirus Aid, Relief, and Economic Security Act provides a list of allowable ESSER I activities. Section 313(3) of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021, includes additional allowable uses of funds under ESSER II. The District was awarded $405,474 of COVID-19 Elementary and Secondary School Emergency Relief Fund (ESSER I) grant funding (AL #84.425D) in 2021 and $1,448,106 in COVID-19 Elementary and Secondary School Emergency Relief Fund (ESSER II) grant funding (AL #84.425D) in 2022 and 2023 by the Ohio Department of Education and Workforce.
The District maintained Education Stabilization Fund (AL# 84.425) activity in a separate fund to allow for accountability of federal expenditures. However, the District posted expenditures to this fund in excess of available Education Stabilization Fund funding of $238,050 pertaining to ESSER II and $847 pertaining to ESSER I. As such, the internal controls relating to monitoring the fund and transactions to ensure reasonable assurance that the charges were accurate were not operating effectively. The lack of effective controls resulted in overspending of the grant and overstatement of expenditures on the Schedule of Expenditures of Federal Awards. Noncompliance with grant requirements could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit.
District management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements. The District should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the District is in compliance with grant requirements and major federal programs are accurately identified for audit.
The District spending more grant funding than was awarded also resulted in adjustments to the financial statements to move the expenditures in excess of the grant award to the General fund as reported in Finding 2023-005. See Finding 2023-005 in Section 2 above. The District spending more grant funding than was awarded also contributed to errors in the Final Expenditure reports submitted to the grantor. See Finding 2023-010 below.