Finding Text
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: 84.425D, 84.425U, 84.425W
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 of $1,172,500 which did not have related services rendered or goods received by June 30, 2024. Additionally, this resulted in $176 of unallowable indirect costs charged to the program.
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 related to the Education Stabilization Fund program.
Questioned Costs
The condition identified above resulted in known questioned costs of $1,172,500 in direct costs and $176 in related indirect costs charged, resulting in total questioned costs of $1,172,676.
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.