Finding Text
Federal Agencies: U.S. Department of Education, U.S. Department of Justice
Pass-Through Entity: California Department of Education, except for Indian Education and School Violence Prevention, which are direct awards
Program Name: Various, see Condition below
Federal Financial Assistance Listing: Various, see Condition below
Compliance Requirements: A/B – Activities Allowed or Unallowed & Allowable Costs/Cost Principles
Type of Finding: Material Weakness and Noncompliance
Criteria or Specific Requirements
Title 2 Code of Federal Regulations 200.403(e) requires costs to be determined in accordance with generally accepted accounting principles (GAAP), which requires expenditures to be accrued in the period in which they are incurred.
Condition
The District accrued balances on open purchase orders at year-end, resulting in over-accrual of expenditures which did not have related services rendered or goods received by June 30, 2024 for various federal programs which were not identified as major programs. Additionally, this resulted in unallowable indirect costs charged to various federal programs which were not identified as major programs. Detailed information for unallowable direct and indirect costs charged related to this issue is as follows:
SEE TABLE IN THE FINDING
Cause
The cause appears to be due to lack of sufficient internal controls over year-end financial statement preparation.
Effect
The District is not in compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles for various federal programs not identified as major programs
Questioned Costs
The condition identified above resulted in known questioned costs of $537,362 in direct costs and $14,784 in related indirect costs charged, resulting in total questioned costs of $552,146.
Context/Sampling:
Unallowable costs were identified through a review of accounts payable for the District as a whole and not through the sample selected for major program testing.
Repeat Finding
No.
Recommendation
The District should implement controls to ensure that all expenditures charged to federal
programs are allowable.