Finding Text
4. Capital Expenditures
Finding Number: 2023-009
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, Allowable Costs/Cost Principles, and Equipment And Real Property Management
Pass-Through Entity: Ohio Department of Education and Workforce
Repeat Finding from Prior Audit? No
Noncompliance, Material Weakness, and Questioned Cost
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200.439 which states, in part, that capital expenditures for general purpose equipment, buildings and land and improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency or pass-through entity.
The District expended $412,699 of its American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) AL number 84.425U federal grant funds for roof replacements and a bathroom renovation. The School District failed to have this capital expenditure pre-approved by the pass-through entity Ohio Department of Education and Workforce for the 2023 grant year due to a misunderstanding of requirements.
Therefore, we consider the amount of $412,699 to be a questioned cost. Failure to obtain proper pre-approval for capital expenditures could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce.